Bonus expectations surge as Goldman and Morgan Stanley back on top in Asian ECM

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Bonus expectations surge as Goldman and Morgan Stanley back on top in Asian ECM

Equity capital markets (ECM) bankers at CITIC Securities and China Securities were the most successful dealmakers in their field in Asia for 2017 – but now the tables have turned. Goldman Sachs and Morgan Stanley have displaced the two Chinese firms to top Dealogic’s 2018 ranking for Asia (ex-Japan) ECM revenue, and bonus expectations are rising as a result.

American banks (Goldman, MS, JP Morgan and Citi) make up four of the top-seven firms in Dealogic’s new list. On the back of this performance, bankers at US firms look likely to land the largest bonuses within Asian ECM. “US banks in Hong Kong will pay more than the Europeans as they’ve generally completed more deals this year,” says Stanley Soh, a Hong Kong-based regional country director of financial services solutions in Asia.

Moreover, three of the four US institutions made major strides up the table compared with the previous year. Goldman could only muster 15th place in Asian ECM in 2017, while JP Morgan (11th) and Citi (14th) were also outside of the top-10. Morgan Stanley jumped ‘only’ two spots year on year, growing its revenue from $173m to $196m in the process.

ECM teams at US banks have been the main beneficiaries of a bumper year for Hong Kong initial public offerings (IPOs). Hong Kong overtook New York to become the top financial centre globally for IPOs in 2018 as companies raised a total of $36.3bn in the city, a 174% increase year on year, according to Refinitiv data.

Hong Kong-based bankers with experience in the Chinese technology sector were particularly in demand last year as so-called Chinese new-economy companies flocked to float themselves in Hong Kong. Smartphone maker Xiaomi and telecommunications operator China Tower raised $5.4bn and $7.5bn, respectively, in Hong Kong last year, for example.

The good times in Hong Kong ECM aren’t expected to last, however. This year hiring across the function is expected to be “subdued”, says a Hong Kong investment banking headhunter. Many 2018 listings have now fallen below their IPO prices as the Hong Kong stock market continues to be volatile, reports Reuters. Meanwhile, the listings pipeline for the current quarter is scant, according to Global Capital Asia.

Image credit: stock_colors, Getty

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