Weak sentiment turns off new market players
Fewer people are seeking the licence to work in finance trade amid the uncertainty and while some firms are cutting staff, others are hiring
The current weak market sentiment is driving more than investors away from the market. It is also discouraging new entrants to the industry, at least for now.
"The current market situation definitely has an impact on the number of people looking to sit the licensing examination," a requirement to work in the financial industry, said Anthony Muh Yi-tong, the chairman of the Hong Kong Securities Institute.
This year, Muh expects about 30,000 people to take the test, about the same number as in the past two years but sharply down from levels before the global financial crisis - 54,980 in 2007 and 67,679 in 2008.
The Securities and Futures Ordinance requires everyone, from stockbrokers to futures traders and fund managers to financial advisers, to pass the exam before they can be licensed. That includes senior finance executives from abroad who must demonstrate sufficient knowledge of the local market and its rules.
In 2007, when the stock market was booming and the benchmark Hang Seng Index hit a record high above 31,000 points and daily turnover exceeded HK$20 billion, firms were busy expanding and people were busy getting licensed. The collapse of Lehman Brothers in September 2008 hit the market hard, sending headcounts plunging.
This year, with the euro-zone crisis in full bloom, many investment firms are in cost-cutting mode, reducing hiring plans or paring existing staff, and that is affecting the number of HKSI exam takers.
Sun Hung Kai Financial executive director Joseph Tong Tang said his firm had hired fewer employees this year because of the uncertain market conditions.
However, Tong said that at the same time, the company was taking advantage of the situation to hire talent that would have been too pricey in boom times.
"World stock markets have been picking up in the past two months and we expect the situation will improve" in the coming months, he added.
Tim Lo, the managing director of French private bank CIC Investor Services, said boutique banks such as his were still hiring "quality people" although some big players were cutting headcounts.
Angelina Kwan Wai, a managing director at Reorient Financial Markets, said while many companies were either standing firm on headcounts or trimming staff numbers, her own company was still putting people on.
"Our headcount has grown to more than 50 from just 16 a year ago. This is in line with our business strategy and growth plans as a boutique investment bank," Kwan said, adding the bank had hired both experienced bankers and new talent.
Over the longer term, Muh believes the number of people who sit the licensing examinations will increase again.
"The Asia-Pacific region is seeing an increasing number of high net worth clients who have a need for wealth management. This will provide opportunities for people who want to join the investment industry in Hong Kong," he said.
A recent Capgemini report showed Asia outpaced Europe in terms of high net worth individuals. Last year, there were 3.37 million high net worth individuals in the Asia-Pacific worth US$10.7 trillion, down about 1 per cent from a year earlier. But Asia-Pacific ranked second behind North America, and ahead of Europe for the first time. Europe's high net worth clients stood at US$10.1 trillion last year, also down about 1 per cent from a year earlier.