Economic sownturn leads to layoffs for 200 Hong Kong bankers over the past year

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22nd April 2024 – (Hong Kong)

The economic downturn in China continues to cast a shadow over Hong Kong’s financial sector, with investment bankers facing increasing job insecurity as deal activity wanes. According to a Bloomberg Intelligence report authored by senior analyst Francis Chan and published on Monday, 22nd April, approximately 200 bankers in Hong Kong have been laid off over the past year.

In the report, Chan highlights the vulnerability of Hong Kong bankers due to their relatively high salaries, which are 40 to 70 percent above those of their counterparts in Singapore. This disparity may now prove burdensome, as firms look to reduce costs amidst financial pressures. “Hong Kong’s bankers might find their high compensation becoming a liability as firms seek cost-cutting measures,” Chan noted.

The ongoing economic friction between the U.S. and China, combined with a crackdown on private enterprises and a lingering property crisis, have led global financial institutions to scale back their investment banking divisions across Asia. Notable firms such as Morgan Stanley and HSBC Holdings have recently implemented staff reductions, with significant impacts observed in both Hong Kong and mainland China.

The slowdown has particularly affected the Initial Public Offering (IPO) market in Hong Kong. The city witnessed its lowest IPO proceeds in over two decades last year, with a further 29 percent decline in the first quarter of this year, amassing only about US$605 million. This marks the poorest quarterly performance since the global financial crisis.

Despite a rise in the number of IPO applications, the prognosis for Hong Kong’s IPO market remains bleak. “The outlook for IPOs in the city may continue to be grim,” Chan asserted in his analysis.