If you survived the big cull of Asian equities jobs last year, we have bad news: more cuts are coming, say industry experts.
Over the past 18 months, equities sales, trading and research roles have disappeared at several banks in Asia, including Standard Chartered, Barclays, Deutsche Bank, BNP Paribas, CLSA, Nomura, CIMB and Jefferies.
But the cycle of redundancies isn’t over.
“There will be more cuts across the board this year – European banks in particular are vulnerable,” says Hong Kong trader-turned-headhunter Matt Hoyle. “Trading volumes are lower, there’s more pressure on fees from institutional clients, and increased competition from HFT firms whose technology is much more sophisticated.”
Credit Suisse is reportedly axing at least half a dozen equities jobs in Asia this month, including Matt Pecot, head of prime services for Asia Pacific, and Jamie White, a sales-trading director in Hong Kong, according to Bloomberg. The bank is trimming costs after lowering its profit targets for Asia in December.
“The CS Asian equities franchise is actually solid. This is more about their pivot to refocus on wealth management in Asia,” says a headhunter with knowledge of the bank.
“I definitely see more equities redundancies at other banks on the cards,” says former Deutsche and UBS banker Benjamin Quinlan, now CEO of Hong Kong finance consultancy Quinlan & Associates. “Most of this will be in the cash business, particularly sales and high-touch sales-trading roles at large banks.”
Banks are still struggling to cope with the decline in Asian equities revenues in 2016, says Quinlan. “The 2015 China bull-market rally failed to continue. Some global banks saw their APAC revenues decline by roughly a third year-on-year in 2016, driven by considerably lower volumes in Hong Kong.”
Market turbulence aside, Quinlan says there are “structural, long-term” factors which are weighing on profit margins at global banks and putting Asian equities jobs in jeopardy. These include the ongoing shift from high-touch to low-touch trading, greater movement of fund flows from active to passive managers, and growing competition from major Chinese brokerages.
“Mainland firms are eating into their market share, especially in Hong Kong. Many of the globals are also off-boarding smaller clients to rationalise costs and reduce risks, which is helping to drive the headcount reductions,” says Quinlan.
Equity research jobs will also take a hit over the next 12 to 24 months as the “broader implications of MiFID II’s unbundling regulations start to be digested outside of Europe”, says Quinlan.
“We will see redundancies continue across equities businesses in Asia as some banks are going through restructuring to account for MiFID II, which will likely be applied on a global basis,” adds Neil MacKinnon, an equities consultant at Hong Kong search firm The Lawson Practice and a former salesperson at CIMB Securities.
Still, MacKinnon does not expect 2017 layoffs to be as large as those of the previous two years. Most dramatically, in 2015, Standard Chartered, shuttered its entire Asian equities operations.
“It will more likely be a case of trimming. It’s an ongoing process due to further development of algo strategies and a tightening of equity research payments,” he says.
And some equities jobs remain sought after. “We’re seeing good demand from banks in areas of specific investment, such as strats, prime services and multi-product sales traders,” says MacKinnon.
Delta One knowledge could also keep you in a job. As we reported last week, Greater China sales trader and Delta One specialist Antony Chiu has rejoined BNP Paribas in Hong Kong.
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