Equity capital markets (ECM) bankers in Hong Kong are under increasing pressure: the market for initial public offerings (IPOs) in the city remains buoyant, but banks are keeping teams lean.
Hong Kong claimed a 15.7% market share of global IPO funds in the year to end-November, with 70 companies listing in the territory raising a total of US$31.2bn. That’s already more than the US$29.7bn raised for the whole of 2014, according to Dealogic data published in the South China Morning Post. And it’s a lot more than the US$19.57bn raised in the second-place IPO city, New York, so far this year.
Hong Kong ECM bankers appear to have benefited from China’s decision to freeze its IPO market from July to early November because of the country’s stock market rout. “Many mainland companies are in favour of listing in Hong Kong as the market has more international investors. In addition, the mainland IPO market is suspended from time to time, prompting mainland firms to opt for Hong Kong,” Joseph Tong Tang, executive director of Sun Hung Kai Financial, told the SCMP, adding that fund-hungry mainland companies will continue to keep Hong Kong in the top IPO slot for the foreseeable future.
This buoyant market isn’t prompting any frenzied poaching of ECM bankers, however, say two headhunters in Hong Kong. “Investment banks are generally in cost-cutting mode – they are stripping out management and keeping teams, including ECM teams, lean. They expect bankers to do more with less, which is putting more pressure on them,” says one. As we reported last week, investment banks in Hong Kong are cutting managing directors and promoting cheaper less experienced bankers to fill their shoes.
There are exceptions, however. As we noted earlier this week, Credit Suisse wants to expand in Asian ECM as part of its plans to double its pre-tax income from Asia Pacific by 2018.
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