Headhunters are warning front-office staff in Hong Kong that the current period of job cuts and low recruitment rates at global banks will extend into 2017.
“Head offices in the West are still reviewing Hong Kong headcounts because revenue numbers are down in Asia, and costs remain high in Hong Kong,” says Michael Cunningham, a partner at search firm Anton Murray Consulting.
“The easiest way to reduce costs further will be to cut more staff at a senior level and those in areas that are performing poorly, such as ECM and resources M&A,” he adds.
This means the job market in 2017 could be similar to this year – constant trimming of teams and not enough new jobs for redundant bankers to step in to.
HSBC, Goldman Sachs and Macquarie are among those still scrutinising the sizes of their investment banking workforces in Hong Kong, says a headhunter who asked not to be named.
“I don’t think the redundancies we’ve seen at global IBs in Hong Kong have been too far reaching,” says former Jefferies trader Warwick Pearmund, now an associate director at Harvey Nash Executive Search in Hong Kong.
“So many factors are now weighing on the industry – in terms of the markets, regulation, deal flow, and fines – so it’s hard to see how hiring will pick up in the near future,” says Pearmund. “In Hong Kong investment banking the job market is particularly tough for anyone senior, especially if they don’t speak Chinese or aren’t a rainmaker – this unlikely to change.”
Mid to senior level redundancies are now here to stay in Hong Kong as banks have “evolved to do more with a smaller headcount,” says former headhunter Stanley Soh, now a Hong Kong-based regional country director of Asian financial services solutions.
While Chinese banks and companies have been hiring investment bankers on the back of record levels of outbound mainland M&A, Western investment banks in Hong Kong have been cutting M&A staff as they struggle to pick up new advisory work.
They’ve also trimmed their capital markets teams and are unlikely to be hiring again soon in this field, says Soh. New listing volume in the first half of this year in Asia was $13.7bn – less than a third of the amount raised the same period in 2015, according to Dealogic figures.
“The job cuts are now on a rolling basis, but there is still a constant replenishment via new analyst and associate classes,” says Soh. “I think banks are taking the correct action to match their front-office headcounts with declining deal pipelines and lower deal fees in Asia. If markets do recover, they can react nimbly and get their more experienced VPs to perform senior responsibilities.”
The outlook for equities sales and trading jobs at global banks appears just as bleak. As we’ve reported this year, several banks – led by Barclays, Deutsche Bank and BNP Paribas – have cut their Hong Kong equities teams. It’s unlikely that any large banks will ramp up their recruitment in the sector in 2017, say recruiters.
“Equities has been the worst hit part of Hong Kong banking,” says Adam Jeffes, associate director of financial services at recruiters Morgan McKinley in Hong Kong. “And now Western banks in particular are being hit hard as activity is generally driven by smaller deals, which are dominated by local firms. If the market continues to stagnate next year, job cuts will be vindicated.”
“Sales and trading hiring in Hong Kong isn’t getting better any time soon – and in any asset class, not just equities,” says former trader Pearmund.
“Bonds look unsettled at a government level and perilous at a corporate level – China corporate debt has ballooned to more than 200% of its GDP,” says Pearmund.
He adds: “And FX trading is increasingly being done away from large banks in Hong Kong and run through specialist platforms. And that’s before we factor in an increase in high frequency trading in FX – which is on the increase and will undoubtedly lead to fewer trading jobs.”
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