Asia is seeing increased demand for prime brokers, but Japan could be the odd man out.
Hedge fund returns are surging and as a consequence, Asia-Pacific demand for prime brokers is coming back to life. But the PB recruitment is mainly in Hong Kong and Singapore, where most Asian hedge funds are based, rather than Japan, according to Nao Batangan, a financial markets recruiter at Michael Page Japan.
“The significant fall in assets under management in Japan since 2006 still makes it harder to justify a presence in Tokyo. Whilst some US firms, that had over-reacted last year, have recently re-hired, others have in turn reallocated resources out of Japan,” says Batangan.
Prime brokerages offer hedge funds services such as clearing, asset servicing, financing and securities lending, so their fortunes rely on the health of the hedge fund market they service, says Warwick Pearmund, a senior consultant for finance sector recruitment at Boyd & Moore.
“Prime broking is extremely dependent on the hedge fund market and Japan is, for all sorts of reasons, still not particularly conducive to hedge funds. Globally it’s a huge and competitive business, but there is very little movement in Japan at present,” Pearmund says.
Batangan, however, says he has seen some new entrants into Japan who have the potential to be big customers. As a result there has been demand for salespeople who can open accounts with these firms.
But firms will face a problem finding good local talent if they try to grow in Japan. “The issue is the difficulty of finding strong PB candidates in Japan, especially in areas such as capital introduction or sales, and this reflects the immaturity of the Japanese hedge fund market compared to its Asian neighbors,” says Batangan.
Pearmund agrees: “They will find it hard to find experienced people and are certainly more likely at senior management level to be bringing people in from abroad.”