Asia offers a wealth of opportunities
Despite US economic woes, institutions are still looking to hire experienced professionals across all sectors in the region, writes Chris Davis
Demand for banking products and financial services is growing at a significant rate across Asia. As a result, finance recruiting firms say demand for professionals in equity derivatives, commodities, foreign exchange and rates will remain robust, while areas such as structured credit will probably be less active.
HSBC is responding with plans to recruit about 500 staff to handle growing demand for banking and wealth management services. Recruits will include wealth managers, salespeople and 200 tellers to staff branches across Hong Kong.
In addition to frontline employees, HSBC plans to recruit about 200 employees to strengthen phone-banking services.
Also boosting its headcount is global financial services firm JPMorgan, which last month said it planned to add about 1,900 new employees in Hong Kong over the next three years. The firm employs about 3,200 staff in Hong Kong.
According to recruiters, there is also a lot of hiring activity in compliance and risk management, areas that look set to be strong this year as banks and financial firms keep a close eye on their operating processes and exposure to risk.
Job analysts said that while subprime associated job losses may affect Asia, there is still a shortage of financial professionals with five to 10 years experience across nearly all sectors.
This is largely due to a lack of recruitment and training during the Asian financial crisis and Sars, which left a void.
While the cascading fallout from the subprime loan crisis has struck the job market hard in the United States and European markets, the need to retain talent may mean the impact of job losses in Asia may be less than elsewhere.
Not so lucky are the business students who were expecting to join internships and full-time posts with embattled financial firm Bear Stearns.
In addition to possible layoffs due to the takeover by JPMorgan Chase, creating job cross-overs, many business school students with job offers from Bear Stearns have been informed their summer internships and full-time positions with the firm were terminated.
The first quarter of this year has been particularly challenging for investors and many working in the financial and wealth management industries as they look for solutions to navigate the US-generated subprime credit crunch.
Despite market uncertainty, last year was a landmark one for the Hong Kong fund industry which saw 257 new authorised retail funds launched. The number of Hong Kong Securities and Futures Commission (SFC) authorised funds stood at a record high of 2,077 as of January.
According to the Hong Kong Investment Funds Association (HKIFA), fund sales reached a record high last year.
Total subscriptions of retail funds amounted to US$45.5 billion, representing 87.1 per cent growth over 2006.
Mainland individuals investing through the qualified domestic institutional investor scheme are also helping to boost Hong Kong's financial industries.
Alexa Lam, the SFC's executive director and deputy chief executive, believes the mainland investment fund market is poised to enter a new era following the signing of a regulatory co-operation agreement between the China Insurance Regulatory Commission and the SFC.
As a result, Hong Kong is the first destination for mainland insurance funds wishing to invest overseas.
To date, the SFC has signed regulatory co-operation agreements with three key financial regulators in the mainland.
Speaking at a HKIFA lunch earlier this month, she said through these agreements the groundwork had been laid for mainland funds and their investment managers, advisers and financial intermediaries to take full advantage of what the Hong Kong market had to offer.
Nigel Sze, managing director, head of investments, Asia-Pacific, Citi Global Wealth Management, said because of the subprime-related worries, the market had seen a significant drop in the price of many assets and this had opened the way to identify value plays across the investment environment.
'There is still a need to maintain a careful investment strategy, knowing that short-term volatility is inevitable and could easily bring short-term losses. In these less certain times, diversification is important,' Mr Sze said.
The recent market disruption had also created opportunities, including in emerging markets, which, as part of his 2008 outlook, Mr Sze recommended that investors placed a higher percentage of funds in alternative market investments in search of better returns.
He said there were plenty of investment opportunities using a full range of assets including equities, funds and currencies.
'It is really just a question of careful selection. First you must choose the right investment theme, the risk level and then look for suitable investment vehicles to build a balanced portfolio,' Mr Sze said.
Pascal Meilland, head of investment advisory Asia, Fortis Private Banking Asia, said Asian funds were becoming more specialised.
'They are now playing major themes linked to this region, such as demographic changes, climate changes and infrastructure needs. As investment advisers we can now fine-tune our fund selection according to a specific regional outlook, or a thematic approach,' Mr Meilland said.
He said the range of funds following these themes had grown significantly, so it had become challenging for investors to pick the right product.
Focusing on fund houses that had a local presence was essential. 'We have observed a tremendous increase of the offering of thematic funds linked to climate change. This is the new concern of our generation, making the job easier for fund providers to arouse investor interest with snappy marketing campaigns.
'This said, there is a long-term investment rationale behind this theme and it is our job to identify the best managers in this crowded area. It is also our task to identify the next trend, before everyone rushes into it,' Mr Meilland said.
Hong Kong's hedge funds had also performed well during a jittery period.
Keen to introduce innovation into Hong Kong's financial markets, the SFC was one of the first regulatory bodies in the world that allowed the offering of retail hedge funds to the public.
As at the end of last year, the net asset size of the 14 retail hedge funds authorised by the SFC was about US$13 billion.
It would also appear that Asian investors are developing an appetite for environmental funds and socially responsible investments.
According to a Merrill Lynch-Capgemini 2007 Report, Asian high-net-worth individuals allocated between 10 and 15 per cent of their portfolios for socially responsible investment, including climate change strategies compared with 6 to 7 per cent elsewhere.
As Hong Kong's wealth belt expands, the insurance industry also experienced modest 4.8 per cent growth last year in the general insurance sector.
Denny Chan, director Zurich Insurance Group (Hong Kong) Life Business, said low interest rates, and the need to plan for retirement, had created demand for yield products and investment solutions offered through the insurance industry.
The latest consumer wealth survey by Citi discovered that about one out of 47 Hong Kong residents, aged between 21 and 29, had liquid assets of HK$1 million or above compared with one in every 100 in 2006.
Hong Kong had more than 400,000 Hong Kong dollar millionaires at the end of last year, but it is thought that this number has dropped a little because of a downturn of equity pricing.