Hong Kong investment bankers could face further job cuts as the slowdown in deals with China persists and employers seek to reduce their highly paid workforce, according to Bloomberg Intelligence.
An estimated 200 Hong Kong bankers have lost their jobs over the past year, senior analyst Francis Chan wrote in a report released Monday. With salaries 40% to 70% higher than their peers in Singapore, Hong Kong bankers could see their pay become a “curse” as employers downsize, Chan writes.
“More global banks could further downsize in the city to achieve greater savings, especially during China’s slowdown,” Chan said.
Global financial firms have cut staff at investment banks in Asia due to a lack of deals amid deteriorating U.S.-China relations, a crackdown on private companies and a real estate crisis. Morgan Stanley and HSBC Holdings Plc are among banks that have scaled back their investment banking activities this month, with Hong Kong and China bearing the brunt.
IPOs have been depressed in Hong Kong, with revenues falling last year to their lowest level in more than two decades. Funds raised through IPOs fell another 29% in the first quarter, to around $605 million, the worst three-month period since the global financial crisis.
Although there are a greater number of IPO applications in Hong Kong, the IPO outlook for the city “may remain dire”, the report said.
Hong Kong’s U.S. dollar and Hong Kong dollar bond issuance has fallen significantly from the 2020 peak, according to Bloomberg Intelligence.
Analysts and associates at investment banks in Hong Kong earned 30-100% more than in Singapore, mainland China and Japan, while directors and managing directors earned 40-70% more, according to a Hays survey Asia completed at the end of 2023.
Compared to investment banking, the wealth management and private banking job market remains stable as mainland wealth funds flow into Hong Kong, benefiting banks such as HSBC Holdings Plc, Standard Chartered Plc and Bank of China (Hong Kong).
“Hong Kong’s financial professionals may face divergent fates due to the different outlooks of its capital markets and wealth management sectors,” Chan wrote.
John Mullally, Hong Kong managing director of recruitment firm Robert Walters, told Bloomberg Television that many clients say they are “at the bottom of the scale” in terms of job cuts.
“The feeling we have is that there will probably be a few more cuts over the next quarter, quarter and a half, but as we move into the second half of the year there will be some improvement,” he said. “But that won’t necessarily result in hiring anywhere near 2021 levels.”
