No doubt, if you look at the pipeline in Hong Kong, there are plenty of IPOs lining up. According to KPMG, The Hong Kong Stock Exchange raised a total of HK$87.3bn in the first half of 2020. It has been a 22% increase compared with the same period last year. It looks like it is going to be a big busy time for equity capital market (ECM) teams.
More work for ECM teams
Recently, the American Senate passed a bill to delist companies that don’t comply with audits in May. This increased regulatory scrutiny of Chinese firms in the US. As a result, it has prompted Chinese firms to choose Hong Kong over New York for their listings. According to data from Refinitiv, fees from IPOs that American banks have received, 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. While American banks are also benefiting from helping their Chinese clients with their listing, the demand for talent in the ECM space should be increased.
No Major Hiring in the ECM Teams
However, this has not been the case. Banks have so far not expanded the teams that are working on these deals. Majority banks are maintaining the ECM headcount with no additional headcount and see how it goes. They are taking a more reactive approach in terms of hiring. Instead of actively increasing the headcount, they are instead open to selectively poaching top bankers who suddenly put themselves on the market.
Investment Banks are Transferring DCM and M&A desks to ECM
Abimanu Jeyakumar, head of Selby Jennings for North Asia, says at eFinancial Careers interview, "investment banks in Hong Kong are transferring staff into ECM teams from their quieter DCM and M&A desks." He adds, "I believe 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.”
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