Hong Kong funds shed jobs as focus shifts to US assets
Jeanny Yu and Ray Chan
Hong Kong-based fund managers are winding back their operations in the city due to slowing growth on the mainland and the rising appeal of investing in United States assets against the backdrop of an appreciating US dollar.
A leading hedge fund recently let its chief financial officer go, a Hong Kong-based fund manager told the South China Morning Post, and "choppy" market conditions were putting start-up hedge funds under mounting operating pressure.
Another recent high-profile casualty of the decline in sentiment was Chicago-based hedge fund Citadel, which cut six jobs from its Hong Kong office at the start of the month and decided to oversee Asian trading from its offices in the US and Europe.
That followed a decision earlier this year by another hedge fund, SAC Capital, to relocate five staff from its Hong Kong office to London and New York.
"Unfortunately, this is the reality. The shutdown of Citadel in Hong Kong is just the continuation of a trend where some firms are becoming more efficient in rationalisation of headcounts and in centralisation of some functions," said Alex Eymieu, a partner of recruitment agency CTPartners.
Hong Kong ran up seven straight weeks of capital outflows from equity-focused funds as of last week, with up to US$2 billion pulled out of the region as the stock market retreated to below levels seen during the 2008 global financial crisis, according to investment bank Jefferies.
China's mutual funds saw a 12.5 per cent decline in assets under management in the first half of this year.
Against this backdrop some asset managers were "willing to take bigger risks" by hiring big names from the market with high offers in a bid to retain capital, while some tended to hire more junior staff to save costs, Eymieu said.
Overall, recruitment in the industry remained sluggish.
"The only demand we see now in the asset management industry is from those Chinese asset managers who are opening yuan-denominated fixed-income funds in Hong Kong," Eymieu said.
The Hang Seng Index is down 6.1 per cent this year, compared with gains of nearly 18 per cent in the S&P 500 Index and Dow Jones Industrial Average in the US over the same period.