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No end in sight to i-bankers’ woes in Asia Pacific

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The axe is making its rounds yet again in Asia. As previously, investment banking – particularly equities – is bearing the brunt of the cuts.

Reuters reported earlier this week that at least 50 bankers were culled over the past three weeks. Redundancies have hit firms like CLSA, Deutsche Bank, Goldman Sachs, and UBS. Those affected have ranged from high-flying top bankers to junior employees.

Here’s a tally of some of the job losses:

  • CLSA slashed sales and research jobs: 25 staff in Hong Kong; 10 in India.
  • Deutsche Bank let go of at least three staff in its Hong Kong equities division. Over in India, the firm laid off five junior bankers in equity sales and research.
  • Goldman Sachs retrenched six staff in Australia, mostly equity sales people and analysts.
  • UBS capital markets head, Guy Wylie resigned. The Swiss bank opted not to replace him.

No end in sight

The nightmare isn’t about to end any time soon either. Even more lay-offs are anticipated over the next few months, say industry sources.

Senior headhunter, Nick Poole, says: “It’s a reflection of market conditions. Perhaps banks were earlier holding on to ascertain if revenues would increase, but fundamentally it has stayed pretty flat, some firms can’t justify the headcount that they’ve got.

“These mid-year cuts are a signal that a number of firms don’t expect great things in the second half.” He expects employment activity to remain downbeat in several areas for the rest of this year.

Recruiters feel the heat

Asia’s downsizing financial sector has had a corresponding impact on financial recruitment firms. Poole knows of several search firms which have let go of people in Singapore and Hong Kong.

“It’s a tough time for headhunters; the reality is that the recruitment market in Asia is seriously overbroked.” Unsurprisingly, firms which focus their efforts on equities, and IBD, have been the hardest hit. “These areas have been the first to take a nose dive; it’s been a real challenge for many.”

Comments (2)

Comments
  1. This is no surprise, given the fall in the number of Hong Kong IPOs, twinned with many local hedge funds suffering, and probably a number of other factors.

    If the banks had focused more on further developing the global market demand for Hong Kong equities to facilitate greater international interest, instead of putting more resources in to feeding local and Mainland market demand, then the resulting diversification would make operations less vulnerable to the downturns of just a few groups of participants. But alas, history repeats itself.

    Attracting more international investor interest requires more than just facilitating global trade and marketing; it also means improving the analytical quality of equity research to match the standards of London and New York. That means proper, unbiased real analysis instead of simply repeating whatever company management says. This would certainly encourage the international investment community to invest more in the Hong Kong Stock Exchange instead of elsewhere, and increase valuations to a high enough level that will attract more IPOs.

    To do this means making research teams more international in content, employing analysts with past experience of tough international markets so there is a more suitable mix of locals and foreigners. A better mix of expertise that caters to a wider range of investors must be the way forward, and those who adopt this international strategy will fair much better. Even the Chinese banks have realised this and are now exploring overseas options as well as looking to upgrade their research teams, but many foreign banks and their respective recruiters just go with the local flow. Hong Kong is already an international trading centre, but in the last couple of years there has been a frenzy to feed local market demand; this works well until there is a downturn in activity; A more sustainable strategy has a synchronised instead of fragmented international spread.

    Yes I am biased because I am a foreigner, but having worked in equity research since 1989 and with experience in both Western and Asian equities, I can see more clearly where things should be heading if investment houses want to be winners in the global arena instead of being an undifferentiated local market participant. Look me up if a quality analyst is needed.

    JohnBesantJones Reply
     
  2. The financial market in Australia is flat as well. Very few jobs being advertised and the few jobs that are available, are being inundated with applicants. In Australia unless you have a hard hat and are willing to work in a mine in the outback, then you could be out of work for a while.

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