Hong Kong investment bankers working for global firms are more upbeat about their bonus prospects than they have been for years, say headhunters and bankers.
“The hope is that bonuses will be better than they have been for the past five years,” says Nick Green, a partner at headhunters Odgers Berndtson. “Market sentiment in Hong Kong is a lot more positive than it’s been for five years, perhaps since the financial crisis. Bankers are more optimistic.”
Job cuts among expensive senior staff in Hong Kong in 2015 and 2016 have also given global banks more scope to increase their bonus pools for their remaining bankers.
But don’t get too excited. While any rise in bonuses will reverse a long-standing downward trend, increases are not likely to be dramatic and won’t be spread evenly across different banks and coverage sectors.
US banks are likely to be the most generous paymasters for 2017. “Goldman, Morgan Stanley, Citi, JP Morgan: the US banks will pay healthier bonus due to a better global revenue pool,” says a Hong Kong banker who asked not to be named.
“The US economy has been doing better this year, and that has also meant that US banks have been performing better, with rising share prices and year-on-year increases in earnings,” says Christina Ng, executive director at LMA Recruitment. “This should have a spill-over effect into their bonuses for Hong Kong bankers, which are likely to be more than last year.”
J.P. Morgan, Morgan Stanley and Citi all feature in the top-seven firms for Asia (ex-Japan) core IB revenue for the first nine months of 2017, according to Dealogic. The other four banks are Chinese.
Unsurprisingly, the best bonuses will likely go to bankers covering mainland China. While Asia Pacific domestic M&A dropped 3% in the first nine months to reach $515.6bn, China continued to dominate with a 60% market share.
“There’s now a clear demand for China bankers – across all sectors – but particularly in areas like technology, consumer and healthcare,” says Green from Odgers Berndtson.
“Industrials and chemicals, and real estate also continue to be pipeline-rich industries,” says Stanley Soh, a Hong Kong-based regional country director of financial services solutions in Asia. “These bankers will see above-market-average bonus due to the higher volume and value of these deals.”
Meanwhile, bonuses still will be focused towards “about the top 30% of bankers, the elite performers”, says Eunice Ng, a director at headhunters Avanza Consulting in Hong Kong.
“The biggest bonuses have recently been awarded to a small number of high performers rather than given out more widely,” adds Green. “This trend will continue, although the hope is that the high-performer group will be larger this year.”
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