White Collar

Financial sector still a top draw for talent despite dwindling market turnover

Growth opportunities from cross-border trading schemes encourage firms to expand hiring, say analysts

PUBLISHED : Monday, 19 December, 2016, 7:46pm
UPDATED : Monday, 19 December, 2016, 7:46pm

The number of licensed brokers and fund managers in Hong Kong reached a record high of 42,571 by the end of September this year despite the fact that many of the brokerages and fund houses are not exactly in the pink of health and are grappling with dwindling revenue.

But the poor outlook has not deterred job aspirants from joining the industry, with the headcount growing 3.2 per cent from a year ago, a record since the new license regime started in April 2003, according to Securities and Futures Commission data.

During the three months between July and September, the SFC received as many as 2,278 applications from candidates wanting to be brokers, fund managers or financial advisers, up 25.4 per cent from the previous quarter but down 5.7 per cent from the same quarter last year.

What makes this even more interesting is that it came at a time when many brokerages were dealing with dwindling commission income after the average daily turnover for Hong Kong stocks during the first nine months of this year fell by nearly 42 per cent year-on-year to HK$67.8 billion.

Mainland Chinese investors lukewarm on Shenzhen-Hong Kong connect, say brokers

Market analysts said that the bullishness in the sector was largely due to the growth optimism and business opportunities from the various cross-border trading schemes.

The Shenzhen and Hong Kong Stock Connect, launched earlier this month, allows international investors to trade 881 Shenzhen listed stocks and mainlanders to trade 417 Hong Kong stocks. The Shenzhen launch followed the debut of the Shanghai and Hong Kong Stock Connect in November 2014.

Brokers said that though the two cross border trading schemes did not have substantial turnover, they had seen steady growth.

Many Hong Kong firms are expanding their research teams to conduct A-share research and to offer other stock market-related services to boost cross border trading.

Apart from stockbrokers, the fund management industry is also in a hiring mood after the mutual recognition scheme, which stared earlier this year, allowed Hong Kong domiciled funds to be sold in the mainland and vice versa. According to SFC data, the number of mutual funds in Hong Kong stood at 2,183 by the end of September, up 4.4 per cent from a year ago.

Though the cross border sales schemes did boost the Hong Kong financial industry and create more job opportunities, participants must also be aware of the challenges and risks, analysts said.

For starters, the analysts are of the view that the city bourse may lose its appeal if the much-talked about Shanghai-London link up materialises. Though Hong Kong is the only market at present to tie up with Shanghai and Shenzhen, it would lose its hub status in cross border trading if the tie-up happens, they said.

Financial lawmaker calls on SFC to relax rules restricting Hong Kong stockbrokers

There are also some grey areas in cross border fund sales due to the imbalance in approvals on both the sides.By the end of September, about 45 mainland funds had got approval from the SFC to be sold in the city, while only six from the city got permission from the China Securities Regulatory Commission for sales on the mainland.

Analysts admit that part of the blame for the mismatch has been the devaluation of the yuan, which has prompted a rush for Hong Kong funds sold in the mainland. This also explains the CSRC’s reluctance to approve more new funds, they said.

If the current uncertainties persist into the next year, then the rosy hiring numbers may well be a thing of the past as the financial sector braces to withstand the market shocks.

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