What you need to know about investment banking jobs in HK, SG and Aus

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Investment bankers across Asia Pacific are entering an uncertain job market as they look for new opportunities now that bonuses have been paid out.

Job cuts in APAC investment banking may be less vicious than last year, but hiring remains subdued.

What are the obstacles, bright spots, and other big trends that you need to know about if you’re job hunting in Hong Kong, Singapore or Australia? We asked an expert in each market.

Hong Kong

Bankers forced to get broader

“Following job cuts over the last few years, bankers in Hong Kong are spread thin and it’s increasingly hard to sustain senior bankers in niche sectors, given the cyclical nature of industries,” says Yvette Kwan, a former APAC investment banking COO at UBS, now a partner at Hong Kong finance consultancy Quinlan & Associates.

“Coverage and origination bankers are now expected to have broader sectoral responsibilities,” she adds. “On the other hand, banks like UBS – which has disbanded its China coverage team – have rolled country and corporate finance teams into sector teams. But the overall theme is that bankers are expected to take on broader remits.”

Falling Chinese M&A hurts the job market

Recent restrictions on capital outflow imposed by the Chinese State Council helped China outbound M&A fall 64% year-on-year to US$30.9bn in Q1, according to Dealogic.

“The job market is slow, similar to last year. It’s mainly replacement hires,” says Kwan. “There was some demand for property sector bankers in 2016, but this has fallen away. And the slowdown in China outbound M&A may have negative knock-on effects for M&A bankers at international firms in Hong Kong.”

Highlights

“TMT is the one bright spot in Hong Kong in terms of sectors. And there’s a bit of activity in the financial sponsor space as many of the larger firms are cashed up – this will positively impact demand for financial sponsors coverage,” says Kwan.

Layoffs

In 2016 several firms – from Barclays to Goldman Sachs – cut bankers in Hong Kong. “For the rest of this year layoffs will be highly dependent on the Chinese regulatory stance in terms of ongoing liberalisation, restrictions on capital flows, and scrutiny of IPOs,” says Kwan. “But juniorisation of teams will continue.”

Chinese banks still hiring

Led by Haitong Securities and CICC, Chinese firms took the top-six places for China IBD fees last quarter. This market dominance is helping them attract talent in Hong Kong. “Chinese banks and brokers are still hiring – and even using guaranteed bonuses – although not as aggressively as a few years back. Bankers from the bulge bracket are moving across to Chinese firms, especially for a step up in rank,” says Kwan.

Singapore

ECM has surged

Southeast Asia ECM saw the highest ECM volume gain out of any APAC market – it more than doubled year-on-year to reach US$2.4bn in Q1, according to Dealogic. Outbound and inbound M&A were up 17% and 27% respectively.

But hiring hasn’t…

“The market in SEA is much better than a year ago, but hiring hasn’t really caught up yet because investment banks are redeploying internal people first before looking for external candidates,” says Eric Sim, a former UBS MD, now an adjunct associate professor of finance at HKUST.

..yet

“I see more hiring if the markets continue to be this buoyant. DCM teams will have to recruit as issuers rush to issue long-term bonds before further US rate hikes,” says Sim. “Syndicated loans will see similar trends. TMT should pick up too as banks prepare for activities in fintech and edtech.”

Credit Suisse in control

Credit Suisse’s APAC markets unit made a loss last quarter, but in Southeast Asia it earned significantly more Q1 IBD fees (US$33m) than any other firm – UBS came second at US$13m. Goldman Sachs, meanwhile, doesn’t make the top-10 for IBD fees, but regional players CIMB (4th), Maybank (5th) and DBS (7th) do.

“Overall, competition in Southeast Asian investment banking is getting tough,” Rohit Chatterji, head of investment banking for South and Southeast Asia at J.P. Morgan, told us earlier this month. “At the same time, there’s a shake-up happening – some banks are no longer around in SEA and clients are gravitating to firms that are most committed to the region.”

Chinese banks tipped to recruit

Although Chinese investment banks don’t feature highly in SEA revenue tables, they are in hiring mode. “While the fee pool for SEA is only about 10% of the overall Asia ex-Japan pool and this is unlikely to change much, I do see Chinese securities houses hiring in SEA as they expand their businesses in the region,” says Sim.

Australia

Redundancies run their course

“Layoffs have been quite heavy in IBD over the past few years, on the back of weak trading conditions within the traditional areas of metals, mining and resources,” says Anton Murray, director of Anton Murray Consulting in Sydney. “But I expect few further redundancies in 2017 as most teams in Australia are already running very light.”

Hiring is happening

Australian bankers generally enjoyed a promising start to 2017. Australian ECM volume totalled US$2.5bn, up 82% year-on-year, according to Dealogic. While both inbound and outbound M&A fell, DCM volume rose 40% to US$60bn.

“Investment banks are pitching for work and doing deals with less headcount than in the recent past, so they’re now seeking to increase their teams because of increased transaction volume,” says Murray. “IB recruitment is fairly active in 2017 – more so than this time last year – on the back of more stable regional and global market conditions.”

Resources bankers back in demand

Despite overall M&A volumes being down in Q1, bankers who specialise in resources will be busy for the rest of the year, says Murray. “I’d expect a big increase in M&A volumes, especially within metals and mining, and broadly across the resources sector. Australian companies in this space are trading at a relatively low value, so I’d expect takeovers by well-funded overseas acquirers, especially from North Asia.”

Locals dominant, but US banks to gain ground

Domestic banks dominate the Q1 league table for Australian IBD fees. Commonwealth Bank ranks first, followed by Deutsche Bank, Macquarie, ANZ, Westpac, UBS, Morgan Stanley, Citi, NAB and HSBC. “The big four Aussie banks and Macquarie will continue to feature prominently given their long-standing corporate client relationships,” explains Murray.

“But I think US banks will become more confident to grow their local headcounts on the back of positive trading conditions back home,” he adds. “Global IBs, especially US ones, are far superior in cross-border M&A transactions, so they will feature prominently in overseas acquisitions of Australian resources companies.”

Image credit: Pinkypills, Getty

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