Global banks will further expand their China equity research teams next year, but Hong Kong will lose out to the mainland as banks base more analysts onshore.
Some banks are ahead of the game. Credit Suisse and J.P. Morgan announced in November that they have hired 11 and six China research analysts respectively so far this year. The US firm plans to add more staff in 2018 and 2019.
Rising demand for Chinese research is being fuelled by the continued liberalisation of China’s securities market and by index publisher MSCI’s landmark decision earlier this year to include China-listed shares in its emerging-markets benchmark. The increase runs counter to an expected global decline in equity research services, driven by the MiFID II investor protection regulations.
“With global asset managers expanding their mandates to invest in the onshore China market, it’s natural that research departments at global banks want to increase their headcount,” says Raghav Kapoor, a former Religare Capital Markets MD, now CEO of research website Smartkarma.
Western banks, including Credit Suisse, J.P. Morgan, Citigroup and UBS, need to grow their China research headcount by up to 20% next year as more Chinese companies are listed on local and international equity markets, says Stanley Soh, a Hong Kong-based regional country director of financial services solutions in Asia. “They need to compete more effectively against Chinese banks with larger research teams,” he adds.
While Hong Kong has traditionally been the main base for analysts covering mainland companies, the majority of the new hiring will be in China itself.
“Most of these jobs will be mainland-based so analysts are better plugged into local networks and can get first-hand information,” says Eric Sim, a former UBS managing director who’s currently a guest lecturer at Renmin University. “Locating them in China allows continual access to managers at Chinese corporates. They can do more site visits and will be better able to understand the companies’ strategies,” adds Soh.
China is also a cheaper location for a hiring drive than Hong Kong. “There will be a move to build more onshore research teams next year. This might come at the expense of headcount in Hong Kong, which has been the prevailing centre for all China research but is now less cost effective,” says Kapoor.
Specialists in sectors such as TMT, healthcare and education will be most sought after in China, says Jason Tan, a partner at search firm Carlson Harriet. “And the more experience you have, the better. Analysts who’ve been in the industry at least 10 years are most in demand,” he adds.
Finding good researchers in China isn’t straightforward, however. “Analysts with China experience, especially senior ones, are often in the local banks. The pool of analysts among the foreign banks is limited,” says Tan. “I’ve been working with a global bank to hire a head of healthcare research, but the job has been open for six months, because buy-side funds are paying more to snatch senior researchers.”
There will be a “musical chairs” of experienced research analysts moving among top-tier foreign banks in China in 2018, adds Soh. Expect salaries to be pushed up as a result.
Related articles:
Four things you should know about APAC banking jobs right nowNew data reveals the fate of your banking job in Singapore, Hong Kong and Sydney.
“I was head of APAC tech IBD at HSBC. I’ve just joined a Tencent-backed website”I’d got to the top at HSBC’s Asian investment bank, but last month I left for a Chinese tech firm. Here’s why.
These are the easiest banking jobs to get in Hong Kong right nowWant an easy ride into your next banking job in Hong Kong? This is where you should be working.
Image credit: kayros, Getty