Are BEA’s mass sackings just the tip of the iceberg for Hong Kong?
City’s stuttering economy and technological revolution in financial industry could mean more jobs will go
Hong Kong lender Bank of East Asia Ltd announced on Thursday it would reduce the size of its brokerage operations in the city, cutting 180 jobs, or 3.8 per cent of its workforce, to reduce costs and consolidate operations amid a downturn in trading volumes on the local stock exchange.
One economist warned the lay-offs were a symptom of the deepening economic malaise affecting the financial sector, and that more staff cuts were in the offing from other companies in the days ahead.
“This is just the beginning. We will see more local banks follow suit,” Citic Ka Wah Bank chief economist Liao Qun said. Liao added that the layoffs had been triggered by the weakening economy and the rapid development of financial technology automation, or fintech.
Hong Kong’s economy grew 0.8 per cent in the first quarter on year, its slowest pace of growth in four years, down from 1.93 per cent in the fourth quarter of 2015. Turnover on the Hong Kong stock exchange during the first quarter is down 23 per cent on year.
“The securities brokerage business in Hong Kong is quite challenged today,” said Brett McGonnegal, chairman of Capital Link International, “Volumes are down and the fintech revolution is in full force ... the result will be that the industry will no longer be able to support brick and mortar outlets as the costs will overrun profits.”
