Christina Ng: Is the current market growth sustainable?

There has been a general buzz in the Hong Kong market recently mainly due to the strong equities and real estate markets. With most firms’ profit beating forecasts, profit announcements by the bulge bracket investment banks have been better than expected. Quarter-on-quarter hiring has also improved, although on an adjusted basis. Quarter two and three traditionally experienced stronger hiring irrespective of a bull or bear market. Hence, increased hiring activity should also be viewed conservatively as a seasonal trend rather than be attributed wholly to market growth.

During the boom years, hiring was ‘business’, ‘growth’ or ‘new products’ driven (i.e. largely business enabling roles). Hiring today focuses more on ‘restructuring’, ‘offshoring’, ‘regulatory’ or ‘M&A’ initiatives, with leaner budgets compared to previous years. Key hubbing initiatives are now back on line and this has meant that some organisations are simply relocating roles from one country to another (particularly in equities and banking operations). As the positive impact was felt largely in Asia, Hong Kong experienced the benefits with regards to the equities business as well as banks which have based their regional headquarters here.

As we have expected, the front office space is leading the way in terms of recruitment. Candidates with strong sales track records and good client networks are in the greatest demand. Low risk businesses such as trade finance and securities services have returned to the limelight again and are no longer considered poorer cousins of the high risk businesses such as investment banking. Credit risk remains in priority due to the issues in defaults and liquidity. With the rising hiring demand, we have seen candidates crossover from various banking sectors, and professionals with strong numerical and quantitative abilities are particularly valued in the market.

Demand continues to be sustained for compliance individuals in the equities business. Niche skill sets such as control room and monitoring remain in demand. Compliance professionals with legal background and professionals from private practices with structured product knowledge are highly valued.

We have also seen a few senior hires made in the area of product control. Some of the talents who were previously made redundant have been taken up on certain key positions, but there remains some supply at the senior end of the market. Whilst equity derivatives recruitment remained fairly consistent, there has been a focus on the cash equity operations area where banks are still seeing more hiring activities than previous years. This trend will continue until the risk appetite of investors return and when they start investing again in more complex products.

Although there are still concerns on the sustainability of the current market, we observed the economy has started on a general upswing and anticipate that hiring demand will remain strong for in preparation of a market upturn in the second half of 2010.