[Hong Kong] Banks in Hong Kong are building up their trading desks to capitalise on the imminent link-up of the Hong Kong and Shanghai stock exchanges, spelling a reprieve for one of the banking industry's endangered species.
Banks and brokerages in Asia launched a heavy round of job cuts in 2012, after hopes of a robust recovery in regional trading were dashed by Europe's debt problems and China's economic slowdown.
But banks including BNP Paribas and Standard Chartered hope the link between the bourses, which will at last let investors trade Shanghai-listed shares directly, will boost demand and generate enough work for their newly hired Hong Kong traders and research analysts.
BNP Paribas estimates the link will boost the average daily value of trading on the HKEx by around 38 per cent to HK$93 billion (US$12 billion) by 2015.
The French bank has hired 19 staff for its Asian equities division from rival banks in the last three months, said Lee Cook, its head of cash equity, Asia Pacific.
The hires will expand an equities team that had lost at least seven members earlier in the year.
Standard Chartered has hired a total of eight equities analysts and salespeople in the last week, according to company announcements, bringing its total to 95 stock analysts and 30 equities salespeople globally.
Others are also gearing up for the opportunities. "It's a great time for us to expand our equities business,"said Fan Bao, CEO of Beijing-based China Renaissance Securities, which in August hired a head for the equities business it plans to build from scratch in Hong Kong.
Dean Stallard, regional director of recruiting firm Hays in Hong Kong, said in an Oct 13 report that the stock connect would have a long-term impact on hiring. "The Hong Kong Stock Exchange, securities companies and brokers are expected to benefit from increased transaction volumes and new business opportunities resulting from this gradual integration, and this in turn will generate new jobs in the banking sector," he said.
China's CSI300 index of the largest Shanghai and Shenzhen A-share listings is up 5.5 per cent so far this year, with a sharp rally since the end of June demonstrating the rewards on offer for international investors.
Mainland investors are also interested in buying Hong Kong stocks directly for the first time.
Demand for traders and analysts covering Chinese stocks has helped to push the number of hiring mandates in the city up by about a quarter compared with a year ago, according to bankers and headhunters interviewed by Reuters.
Hong Kong headhunters said such robust hiring was unusual for the last quarter of the year, when banks usually refrain from adding staff ahead of annual bonus payouts. "I can't remember it ever being this busy at this time of year," said Russell Kopp, managing director in Hong Kong at Correlate Search and a specialist in hiring equities staff.
Recruiters and bank executives said the hiring spree was also fuelled by a resurgent Japanese market and hopes for higher growth in post-election India and Indonesia; salespeople and analysts familiar with other Asian markets are often located in hubs like Hong Kong.
The hiring trend also runs contrary to a broader industry downturn in banks' equities businesses, with total headcount in that division among the top 10 players globally down 13 per cent since 2010, according to research firm Coalition.
The Hong Kong and Chinese governments agreed in April to allow international investors to trade mainland Chinese shares via the Hong Kong exchange, while mainland investors will be able to trade Hong Kong shares via the Shanghai Stock Exchange.
The launch of the program is not all good news for bankers. The HK-Shanghai connect could lead to some job losses for people who created and sold financial products that provided indirect access to China's 'A' share market, which will become redundant when people can invest directly, said Duncan Mackay, director at recruitment firm Tardis Group.