A boom in activity in the finance sector doesn’t always lead to a surge in hiring. This appears to be the case in Hong Kong, where plenty of IPOs are in the pipeline, but where banks have so far not expanded the ECM teams that are working on these deals. The Hong Kong Stock Exchange raised a total of HK$87.3bn in the first half of 2020, a 22% increase compared with the same period last year, according to KPMG.
In May, the American Senate passed a bill to delist companies that don’t comply with audits, which has increased regulatory scrutiny of Chinese firms in the US, prompting some to choose Hong Kong over New York for their listings. Most notably, Ant Group, the Chinese fintech firm and Alibaba affiliate, is planning a dual listing in Hong Kong and Shanghai in what could be the biggest IPO this year. Hong Kong saw $7.4bn worth of new listings for Chinese technology companies alone in H1 2020, while only $1.6bn was raised in the US for such deals.
US banks are still benefiting from helping Chinese clients with their listings. American bank fees from IPOs, follow-on share sales and convertible bonds issued by Chinese companies – including the likes of retailer JD.com and tech group NetEase – have increased by about 24% year-on-year so far in 2020, according to data from Refinitiv.
Morgan Stanley, Goldman Sachs and JP Morgan top Refinitiv’s list of US banks for fees generated from Chinese offshore IPOs, but these banks and their rivals have not increased headcount in their ECM teams in Hong Kong. “There have been plenty of high-profile IPOs completed and announced in Hong Kong, but there’s been no additional hiring, because banks have decided they can make do with their current headcount, at least for now,” says John Mullally, regional director for South China and Hong Kong at Robert Walters.
ECM teams are busy in Hong Kong and are open to selectively poaching top bankers who suddenly put themselves on the market, but there is no “major hiring” happening, despite the strong IPO pipeline, says headhunter Eunice Ng, director of Avanza Consulting in Hong Kong.
If you’re looking for an ECM job in Hong Kong, your best bet may be to work as an in-house advisor for one of the Chinese companies involved in a listing, says Ng. “Pre IPO or post IPO – these firms are looking for bankers with proven IPO experience who can guide them through the IPO process and beyond,” she adds.
Abimanu Jeyakumar, head of Selby Jennings for North Asia, says investment banks in Hong Kong are transferring staff into ECM teams from their quieter DCM and M&A desks. He believes ECM hiring will eventually pick up, however, especially if “geopolitical tensions keep rising between the US and China”. “US-listed Chinese firms may look to delist and relist in Hong Kong or China, which should keep investment banks busy in the region”, he adds.
Photo by Sebastian Huxley on Unsplash
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