You didn’t get to vote for or against him, but if you’re working in Asian banking the election of Donald Trump as US President could still have a big impact on your career.
We’ve already reported on how Trump could change banking jobs at a global level – from less regulatory red-tape to the rebirth of prop traders.
And now we’ve identified some potential effects (including, surprisingly, a few positive ones) specific to Asian jobs.
China is considering allowing foreign investment banks to run their own units on the mainland, abandoning rules that require them to operate under joint ventures. Global banks would potentially expand and hire more staff if the restrictions were lifted. But Beijing could still backtrack on the proposals if Trump sours US-China relations.
Trump campaigned on an anti-China platform, labelling it a “currency manipulator” and threatening to impose 45% tariffs on Chinese imports. “Trump’s highly protectionist trade rhetoric with China doesn’t bode well for the continued opening up of China to US banks,” says former UBS banker Benjamin Quinlan, now CEO of Hong Kong finance consultancy Quinlan & Associates. “If he aggressively pushes that line on tariffs, the ongoing discussions about foreign banks securing 100% ownership of their securities operations are likely to stall.”
Only J.P. Morgan and Morgan Stanley featured in the top-10 firms for China investment banking revenue for the first nine months for 2016 – and they brought up the rear of Dealogic’s table. Could they slide further down revenue charts under Trump? Perhaps. “I expect US banks to face new political hurdles in securing deals in China, especially when focusing on Chinese state-owned enterprises,” says Jason Tan, a partner at search firm Carlson Harriet in Shanghai.
As mainland companies look to expand overseas, cross-border M&A bankers have become in high demand at Chinese investment banks and at the corporates themselves. They could be handling even more deals in the future.
“The recent spate of China M&A activity into the US is likely to be put on hold in the short term as Chinese corporates evaluate currency impacts and share price swings, and await clarity around Trump's policies on offshore corporates,” says Quinlan. “But longer term, Trump’s desire to ramp up domestic spending is likely to create a major fiscal deficit, devaluing the US dollar and creating greater interest in US acquisitions by Chinese companies.”
We’ve already predicted an underwhelming post-bonus hiring season in Hong Kong and Singapore next year, but now the first two quarters could be even quieter. US banks – Goldman and BAML most recently – have been trimming staff in Asia as they face increased competition from Chinese rivals. They are unlikely to revive their hiring if markets remain uncertain following Trump’s inauguration on 20 January.
“The words ‘unexpected’ and ‘change’ are scary these days in banking,” says a senior manager at a global bank in Singapore. “And this means putting a halt on any hiring that’s not essential, especially at American banks.”
Several smaller private banks are already finding that overheads are too high to make enough money in Asia – ANZ, Barclays and Coutts are all selling up in the region this year. The Trump presidency could make it even harder for relationship managers to eke out profits.
“Increase market volatility is going to push private clients to go for safe-haven assets or simply park their money in cash,” explains Sean Kang, director of Asia Pacific wealth management at consultancy McLagan. “This will have negative effects on private banks’ margins in Asia.”
Trade finance emerged from the financial crisis as one of the safer places to work in Asian banking as global banks sought steadier sources of revenue. This could potentially change under Trump if he carries out his anti-free-trade campaign promises, and US trade with Asia declines as a result.
Most prominently, the Trans-Pacific Partnership – a landmark free-trade agreement involving 12 countries, including Singapore – looks dead in the water. “This potential re-evaluation of international trade agreements at the regional and global level is not going to go down well for Asian banking,” says Kang.
Over the past decade US banks have been at the forefront of offshoring operations and IT jobs – first to Singapore and more recently to lower cost markets like India and the Philippines. Trump, by contrast, campaigned on forcing American companies to keep more jobs in America. While much of the movement of back-office banking roles is now between Asian countries, any offshoring to Asia from the US is likely to be put under the microscope under his presidency.
“Trump has already singled out Singapore in one of his speeches as one of the countries that has plundered jobs from Americans, and he’s spoken about a special tax to deter jobs outflow,” says Pan Zaixian, general manager of Kerry Consulting in Singapore.
Asian ECM bankers – particularly in Hong Kong, the hub for new listings in the region – could potentially benefit as a side-effect of the Trump regime. “Offshore listings of Asian companies in the US – such as Alibaba – may dry up, with more IPOs returning to the region,” says Hong Kong banking consultant Quinlan.
“This could be driven by a general rise in protectionist and nationalist sentiment, as well as growing uncertainty around the US regulatory landscape. And it could bode well for domestic listing activity in Asia, at least in the short to medium term,” he adds.
If markets remain volatile in the months before and after Trump takes office, will global banks like Barclays and Deutsche Bank need to reinforce the Asian research, sales and trading staff they culled earlier this year? Unfortunately not.
“There’s a lot of uncertainty ahead and the simple response will be heightened volatility in trading, especially around FX and rates,” says Quinlan. “But I think existing employees will be covering the work – there won’t be additional headcount. All this uncertainty will no doubt lead to a further freeze in hiring for global banks in Asia.”
Want to escape the volatility caused by Trump in the US, Brexit in Britain, or Chinese meddling in Hong Kong? Trump’s election has reinforced Singapore’s status as the most politically stable global financial centre. Recruiters there are already preparing for an increase in post-election enquiries from US banking professionals.
The actual number of Americans who end up in the city state is likely to be small, however. Many are put off moving by American tax laws that mean US expats in Singapore don’t enjoy the same tax advantages as their European counterparts. The job market, meanwhile, isn’t as buoyant as last year and is increasingly favouring Singapore’s growing pool of local banking professionals.
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