HK develops strong bonds

As the debt market continues to expand, job opportunities are quickly opening up for experienced professionals Hong Kong's bond sector may be small compared with more developed markets, but there is much potential for growth in fixed income roles. This is because investment banks are becoming increasingly eager to do business in mainland China, recruiters say. Matthew Hoyle, chairman of financial recruitment firm Matthew Hoyle International, said because the Hong Kong bond market was quite small there was a limited pool of talented people available. He said most employers were looking for people with at least two years' experience, and it was not uncommon for some senior positions to be vacant for years. To understand the size of the bond sector in Hong Kong, statistics from the Hong Kong Monetary Authority (HKMA) showed that at the end of the first quarter, the total outstanding amount of Hong Kong dollar debt instruments, excluding exchange fund bills and notes, stood at HK$583 billion. While this may seem to be an astronomical number on the surface, it is a fraction of the size of the Hong Kong stock market, which had a market capitalisation of HK$16 trillion over the same period. The value of listed bonds on the New York Stock Exchange, the biggest centralised bond market, stood at US$919 billion at the end of 2006, the latest year for which figures were available. A spokesman for the HKMA said despite a difficult external environment, Hong Kong's debt market continued to expand last year. He said although new issuance declined, total outstanding debt grew. Last month, there were 178 participants in the Central Moneymarkets Unit, which was established in 1990 to provide computerised clearing and settlement facilities for Exchange Fund bills and notes. In December 1993, the HKMA extended this service to other Hong Kong dollar debt securities. 'It is inherent to the job market in Asia, people in Hong Kong are really not all that interested in training people,' Mr Hoyle said. 'That is part of the reason why there is such a massive shortage of experienced people, everyone wants people who can hit the ground running and start making them money straight away.' Mr Hoyle said he had a client earlier this year who lost his job in the bond market one week and walked into a new position a week later with a 30 per cent pay increase. 'The pool of talent for people, who have Asian experience, is very limited and everyone is fishing in the same pond,' he said. 'There is a huge supply on the graduate side, but there are just not that many people interested in them.' According to Hong Kong's Census and Statistics Department the number of people employed in the finance and insurance sector jumped 9 per cent (or 15,200 employees) in the year to March. Richie Holliday, managing director of financial recruiter Morgan McKinley, said as multinational and European banks became keener to exploit the growth in the mainland economy, growth in jobs in fixed income in Hong Kong was inevitable. 'If you are looking at corporate bonds, it's an investment vehicle to help people take advantage of that growth [in China]. 'The sector itself has much more mileage to go. There is a lot of growth that still could be experienced [in the fixed income sector] over the long run,' he said. Mr Holliday added that typical roles in fixed income included sales and trading, and middle- and back-office support roles such as trade support, settlements and operations. He said it was difficult to gauge the number of people working in the sector in Hong Kong because of the liquid state of the local banking sector, and the prevalence of convertible bonds, a type of hybrid security that fitted into both equity and debt categories. Mr Holliday said salary expectations in equities and bonds were roughly the same. 'We run a salary survey each year and if you were working with an equities team in a settlements role at an intermediate level you could expect between HK$30,000 and HK$45,000 a month,' he said. 'This would be about the same in the debt market, there is not a great deal of difference.' Mark Thomas, Hong Kong-based manager of financial recruiter WH Marks Sattin, said banks had previously been desperate to take on new staff, but things had definitely slowed this year. Mr Thomas said while it might not be as glamorous as the equities market in Hong Kong, there were still good salaries on offer in the debt market. He said all employers were 'after the same sort of people', which gave them good bargaining power. 'Everyone is looking for the same thing and it is difficult to find people with a proven track record of ideally five years,' he said. 'Some people are being moved internally by their companies from the United States or Europe. Good people with bonds experience can get great salaries because there are fewer of them.' Quick facts Despite the financial market slump, there are still plenty of job opportunities available in the bond market Employers looking for people with at least two years' experience Limited supply of people with Asian experience There is an oversupply of graduates Competition for graduate programmes is fierce