After a lacklustre 2010, many are looking forward to the coming year with anticipation of a pick-up in recruitment activity. Here’s our considered opinion on sectors that will fare well, and those that may have a tough 2011.

2011 could be a good year for…

Equity derivatives

The relatively nascent equity derivatives market has been expanding since the launch of Nasdaq Dubai’s trading platform in November 2008.

According to the stock exchange, trading volumes had grew from 90 in January 2009 to “several thousand every week” at the end of the year and it was waxing lyrical about equity derivatives’ growth prospects in the region during 2010.

However, it’s only now that banks are beginning to show any sort of interest in growing their teams on the ground, suggests Bill Allum, managing director of headhunters Execuzen.

“Investor appetite for equity derivatives in the Middle East has been creeping back over the last year, and gradually banks’ appetite for recruiting both salespeople and traders is returning. We’d expect this to pick up in 2011,” he says.

“Clients are telling us they expect to build their equity derivatives teams in the region next year,” adds Hasnain Qazi, Middle East business manager at Huxley Associates.

Wealth management

The wealth management sector continued to grow in the Gulf in 2010, as more firms realised the value of targeting high net worth individuals in the region, or looked to poach key revenue generators from rival companies. However, the expectation is that more vociferous levels of hiring will take place in 2011.

“It’s understood that there’s still a lot of untapped wealth in the region,” says Ally Ho, head of financial services at headhunters Pedersen & Partners. “But whereas previously the focus was bringing in people with a book of business, next year will see more banks looking to bring in people with particular types of relationships. There’s going to be a greater push to capitalise on the family offices market, for example.”

“The green shoots continue to emerge in wealth management, and we’d expect that to continue next year,” adds Jonathan Gould, manager – financial services at Morgan McKinley in Dubai.

Risk, regulatory and compliance roles

Financial services companies in the Gulf have been gradually moving towards Western standards of corporate governance, which has been driving demand for risk, regulatory and compliance expertise over the last 18 months. The general feeling though, is that there’s more work to be done and these skills will still be in demand over the coming year.

“It continues to be a challenge for financial services firms in the Gulf to recruit high quality risk management professionals,” says James Sayer, senior manager – Middle East at recruiters Robert Half. “Companies are looking for experience in mature markets, as they build more sophisticated risk management frameworks.”

And 2011 could be a bad year for…

Capital markets

The decision of Axiom Telecom to abandon its big ticket IPO earlier this month was indicative of the lack of confidence in Gulf equity markets. Research by The National newspaper showed that average daily volumes on the Dubai Financial Market are down 65% year on year.

In such an environment, few companies have been willing to venture into the market – Ernst & Young’s IPO monitor showed that volumes fell by nearly 80% year on year to Q3, raising a measly $177m.

Conversely, there’s a lot of positive sentiment around the debt capital markets, with volumes expected to exceed $30bn this year, according to research by HSBC.

Unfortunately, though, there seems to be little appetite to hire and recruiters are expecting consolidation next year.

“DCM teams have largely remained stable, and it would take a considerable upswing in activity before banks start to build their teams again,” says Ho. “Meanwhile, on the ECM side, we’re hearing talk of downsizing or consolidation of teams next year.”

“Few investment banks have done well out of capital markets this year, and we’d expect more lay offs in the coming months,” adds Peter Greaves, director, head of financial markets at headhunters McArthur Murray.

Private equity

The paucity of private equity deals in the Middle East has been ongoing for around two years and there seems little indication that things are likely to improve. Some players, such as Abraaj Capital have been talking up the possibility of making new deals in the coming 12 months.

Recruiters, however, remain unconvinced about employment prospects in this sector next year.

“It’s been another disappointing year for private equity in the region, and most firms have spent their time managing existing portfolios rather than making new investments,” says Allum. “There are still bits and pieces of recruitment, but we don’t expect any big change of fortunes next year.”

With firms sitting on excess capital, fund raising (quite understandably) has been on the back burner – just $1.1bn was raised in MENA private equity in 2009, according to Gulf Venture Capital Association. However, the talk is of new funds in the coming year, suggests Ho.

“We’re already hearing of roles for capital raising professionals in private equity, as we’re expecting some new players and new funds next year,” she says. “Generally, private equity recruitment remains muted, however.”

Consumer banking

There have been a few reasons for optimism in the retail banking space of late – Emirates NBD says it intends to recruit 300 next year for consumer banking, as provisions for bad loans shrunk by 50%; Union National Bank appears to be stepping up its efforts to gain a bigger share of the market and the banking sector in certain countries – in particular Saudi and Qatar – appear poised for growth again.

However, generally speaking there’s little sign that banks will look to add to their ranks to a significant degree next year. Provisions for bad loans continue to weigh heavy on their balance sheets, even in light of improving economic conditions in the region.

“A small number of banks in the region have a strategy for growth next year, but we’d expect little recruitment in consumer banking across the board and some firms still need to restructure,” says Greaves.