HONG KONG'S growing stature as a regional financial centre is bound to cause significant structural changes within the investment community. With the market becoming increasingly sophisticated and liquidity flowing in from Japanese, European and North American investors, the territory's investment firms now require a vast array of new talent to handle the new business. The demand for talent has been increased by the fact that American investment firms such as Salomon Brothers, Smith Barney, Morgan Stanley and Goldman Sachs have aggressive plans to either expand or re-establish operations in Hong Kong. This has created an urgent need for salesmen, brokers, analysts, derivatives specialists and all the back-office employees needed to support larger operations. At the same time, a number of investment firms with operations in Japan are taking a serious look at Hong Kong as a base for tapping business in fast-growing Southeast Asian markets. Nomura International, for example, is reportedly planning to move all of its Asian equity trading operations to Hong Kong from Tokyo. What adds a healthy dose of intrigue to these developments is that the American investment houses now find themselves in awkward positions when it comes to spelling out their plans. The strong gains by stock markets in Hong Kong, Singapore, Indonesia, Thailand and Malaysia have only galvanised their desire to grow quickly. However, they are hampered by the fact that building a strong team requires time and patience - two scarce commodities when there is so much money being made. Another interesting development is the emergence of new investment vehicles and products such as short-selling and convertible bonds, which will also create a need for more manpower. Stock Exchange of Hong Kong executive director Paul Phenix told an investment conference last month that the re-launch of Hong Kong's short-selling market next month could see the investment community boosted by as many as 500 employees. So with every firm armed with aggressive plans and heaps of optimism, the key questions are where all these new employees will come from and what this demand will mean for the investment community. The American investment houses have already created a stir by seducing experienced managers with lucrative packages. An institutional salesman working in London was recently given a top-notch salary, a flat and a club membership to come back to Hong Kong. Unlike in the 1980s, when the American investment houses moved into Hong Kong and dipped their toe in the water before scurrying back home, there is no doubt they now mean business and will use their financial clout to establish a foothold. One only has to look at the results recently posted by Wall Street giants such as Merrill Lynch to receive a clear picture of the resources American firms can unleash to attract talent. Local firms have, for the most part, maintained a stiff upper lip when asked whether the larger role adopted by US investment houses would create a bidding war for talent or a squeeze on profits. They strongly contend that the robust growth of the region's various markets will generate more than enough business for everyone. And they point out that US firms have concentrated on specific areas, while leaving the retail business relatively unscathed. This approach may have much merit, but there is little doubt once the Americans decide to become major players, the playing field will never be the same. Japan, where US houses have picked up significant market share, illustrates the truth of this. Over the next few months, Hong Kong's investment community could take on a strong resemblance to New York as the battle for talent and growth intensifies. Not only will new talent arrive from overseas, but entire departments will be seen walking across the street - something that will be taking place soon between two American investment firms. This should all prove to be good business for everyone involved - money-seeking investment employees, commission-hungry headhunters and, of course, muck-raking business journalists.