Hong Kong's analysts face more tough times ahead - and perhaps hundreds more sackings - as companies and fund managers grow increasingly disenchanted with analyst research and concentrate their business with a smaller number of brokers, according to a survey.
The survey, conducted by Tempest Consultants and sponsored by news organisation Reuters, found Hong Kong's brokers facing a pincer action as clients on both the buy and sell sides turn their attention elsewhere.
Corporate finance directors are less willing to spend time with financial audiences, and fund managers are using fewer broker teams and spending less time reading broker research.
For analysts, the verdict was stark: only half rated even a single vote from fund managers (of 498 analysts identified, only 253 received votes), and a mere 15 per cent of analysts received 69 per cent of the fund managers' votes.
'This is obviously good news for the top analysts,' Tempest director Stephen Parker said. 'But the sad side of this finding is that with current depressed market conditions, it's difficult to avoid the possibility of a further shakedown, with perhaps as many as 350 analysts being vulnerable.' Credit Lyonnais' research analysts were ranked highest overall by fund managers, while Goldman Sachs' analysts were given the top spot by finance directors.
Of the 56 fund management groups participating in the survey - which account for 66 per cent, or US$32 billion, of the institutional monies invested in Hong Kong equities - 49 per cent were using fewer broker teams and 46 per cent planned to increase their own in-house research capabilities.