Don’t expect recruitment in Hong Kong investment banking to tick up by much early next year – most global players are still looking to keep a lid on costs.
“Global economic drag” will affect post-bonus hiring across the board (with the exception of control functions) at large banks in Hong Kong, according to a COO of a US bank in the city, who asked not to be named. Many firms will enforce freezes on new headcount, he adds, with hiring largely limited to replacing staff who leave.
Investment banking and trading headcount at 12 major banks in Asia Pacific fell almost 10% year-on-year to 11,200 at the end of the third quarter, according to Coalition. In Hong Kong itself, Barclays, Goldman Sachs and BAML are among those to have cut their front offices this year.
“I don’t think the redundancies we’ve seen at global IBs in Hong Kong have been too far reaching – more will follow,” says former Jefferies trader Warwick Pearmund, now an associate director at Harvey Nash Executive Search in Hong Kong.
“2017 is going to be another difficult year in investment banking,” adds John Mullally, financial services director at recruiters Robert Walters in Hong Kong. “Tough times will continue as international banks are losing market share to mainland Chinese banks, especially in debt capital and equity capital markets.”
In the first nine months of this year, Chinese banks held seven of the top-10 places for Asia ex-Japan revenue in both ECM and DCM, according to Dealogic.
International investment banks in Hong Kong will continue to cut underperforming foreign directors and MDs in 2017, as they have done this year.
Senior expatriates will need to provide “very good business cases” to keep their jobs because deals are increasingly being made inside China, so bankers “must productive on the ground in China”, says a senior banker at Goldman Sachs. “For the most part, many senior guys will just be covering their costs,” he adds.
Experienced (but expensive) Hong Kong investment bankers should still fear being replaced by associates and VPs next year, according to the experts we spoke with. This will in turn open up analyst jobs.
“Junior bankers are increasingly local Chinese. There are higher barriers to entry to Chinese deals that especially call for Chinese banking experience,” says a Hong Kong banking recruiter who asked not to be named. “The Chinese market is very much a relationship-driven one.”
There could be a few bright spots for global investment banks in Hong Kong next year, however.
Chinese pharmaceutical companies have been on a global acquisition spree over the past 12 months, and healthcare coverage bankers should remain comparatively in demand and immune from redundancies.
“Technology, media and telecoms has also been more buoyant for a while now,” says Mullally. “And there are signs of stronger deal flows.”
While global banks in Hong Kong may be shut out of smaller deals, they are better placed to advise on larger cross-border transactions in healthcare and TMT.
Image credit: TomekD76, Getty