Hong Kong investment bankers could face further job cuts as the slowdown in China deals continues and employers look to shed highly compensated staff, according to Bloomberg Intelligence.
An estimated 200 Hong Kong bankers lost their jobs last year, senior analyst Francis Chan wrote in a report published on Monday. With senior bankers’ salaries 40% to 70% higher than their counterparts in Singapore, bankers in Hong Kong could find their compensation becoming a “curse” if employers make cuts, Chan wrote.
“More global banks could further reduce their workforce in the city to achieve greater cost savings, especially during China’s economic slowdown,” Chan said.
Global financial firms have cut investment banking staff in Asia amid a deal drought caused by deteriorating U.S.-China relations, a crackdown on private companies and a housing crisis. Morgan Stanley and HSBC Holdings Plc are among banks that made cuts to their investment bank this month, with Hong Kong and China bearing the brunt.
IPOs in Hong Kong have been subdued, with proceeds falling to their lowest level in more than two decades last year. IPO revenue fell another 29% to about $605 million in the first quarter, the worst three-month period since the global financial crisis.
Although there is a higher number of IPO applications in Hong Kong, the IPO outlook for the city “may remain bleak,” the report said.
According to Bloomberg Intelligence, issuance of US dollar and Hong Kong dollar bonds in Hong Kong has fallen significantly from its peak in 2020.
Investment banking analysts and staff in Hong Kong earned 30-100% more than in Singapore, mainland China and Japan, while directors and chief executives earned 40-70% more, according to a survey by Hays Asia in late 2023.
Compared to investment banking, the wealth and retail banking job market remains stable, with wealth funds flowing into Hong Kong from the mainland, benefiting banks such as HSBC Holdings Plc, Standard Chartered Plc and Bank of China (Hong Kong).
“Hong Kong’s financial professionals may face different fates due to the different outlook for the capital markets and asset management sectors,” Chan wrote.
John Mullally, Hong Kong managing director at recruitment firm Robert Walters, told Bloomberg Television that many clients say they are “at the bottom” when it comes to cuts.
“We feel that there will probably be a little bit more cuts over the next few quarters, the next quarter and a half, but that there will be some improvement as we start the second half of the year. ” he said. “But that won’t necessarily result in hiring getting anywhere close to 2021 levels.”