INVESTMENT banks put on a brave face ahead of the weekend after a wave of sackings hit the troubled finance sector. On Friday, local investment bank Peregrine Investments Holdings confirmed it was laying off 275 staff - after the company lost heavily when regional markets slumped - and BZW Japan laid off 200 as it closed its Japanese equities operation. Analysts expect more finance companies to meet the same fate in the face of falling share prices and market turnover in a high-cost industry. 'In general, I would say our industry is a highly cyclical industry where volumes can expand and then contract by up to 80 per cent or 90 per cent from the peak levels,' said Marc Faber, managing director of Marc Faber Ltd. 'The problem of the industry is that a lot of costs are fixed, like computer power, office rents and so forth, so the first thing to go when things turn bad are employees. 'I think a combination of management staff, middle management staff, employees, sales staff, research analysts, strategists - these kinds of people [will be laid off]. 'I think Hong Kong is going to suffer from a double whammy of very high costs and lower trading volumes. 'But this is not only confined to the financial service industry,' Mr Faber said. 'I think the real estate service industry, the real estate agents, that is an industry that will shrink staff may be 50 per cent because of transaction volume. 'Purchase and sales agreements in May-June were still around 25,000. I think now they're down to less than 10,000 per month.' Spokesmen for some of the biggest investment banks operating in the SAR were more sanguine about their prospects. A spokesman for Morgan Stanley Dean Witter said the company had no plans to lay off staff. 'We have no plans to make any changes. We have a long-term plan. That hasn't changed. Certainly we wouldn't make any comment on that,' the spokesman said. The bank reviewed the situation on an ongoing basis but had a long-term commitment to Hong Kong. 'The idea is that when you get into these markets, you know that there is volatility and you have to be prepared to make the commitment through the bad times as well as the good,' the spokesman said. 'We don't go through massive hiring and firing swings. We have a very slow, steady approach to building our business out here.' Merrill Lynch Asia Pacific spokesman Robert Grieves quoted the company's chairman saying Merrill was expanding: new staff were being added to the mergers and acquisition teams, while fund management also would take on more people after the parent company's recent agreement to acquire London-based Mercury Asset Management Group. Salomon Brothers also denied it was planning further layoffs. 'We're in the process of completing a merger so there have been a number of layoffs which have been publicised in the US and elsewhere,' a company spokesman said. 'But as far as laying off staff because of a downturn in the markets, we have no plans to do that.' Lehman Brothers spokesman Gerry Kay said: 'We're more or less where we need to be. Lehman Brothers never went through a massive build-up in Asia anyway. 'We've been relatively flat year-on-year the past three or four years. It's not as if we had a problem in the first place.' China Everbright Securities head of research Patrick Chia said he expected bigger investment banks, which had higher overheads, to start downsizing if regional markets did not recover soon. Smaller operations also were expected to suffer. 'I think there are a lot of third-tier brokers facing a lot of difficulties, and a lot of bad debts will gradually be incurred,' Mr Chia said. 'If trading continues to be very thin, then you'll see more problems. 'In the past few weeks, the problem has not been so serious because in the first half of this year, a lot of brokers made a lot of money,' he said. 'They still have the profit on hand, but the market now is very poor.'