According to bankers, several major Chinese investment banks in Hong Kong, including Haitong International and China Merchants Bank International, have cut staff in their investment and equity departments to cut costs during the city’s IPO drought.
Chinese investment banks have expanded their presence in Hong Kong over the past year to capitalize on strong demand for secondary listings from US-listed Chinese companies after new cybersecurity rules imposed by Beijing halted lucrative IPOs by tech companies previously destined for New York.
But the number of Hong Kong listings fell sharply in the first quarter of 2022 from a record last year, driven by strict pandemic lockdowns, rising geopolitical tensions between the US and China and Beijing’s regulatory onslaught on the tech sector.
Haitong International, one of the top Chinese bookrunners in Hong Kong last year, has made a series of layoffs across all departments in recent weeks, while China Merchants Bank International, another mainland Hong Kong-based brokerage firm, has laid off about 10 investment banker staff last month, said two people familiar with the matter.
Guotai Junan International, the Hong Kong arm of mainland China investment banking group Guotai Junan Securities, fired several of its fixed-income and IPO principals in early June, the second person said.
Some bond finance bankers have been transferred to equity research departments, bankers at a Chinese investment bank formerly focused on the technology sector said.
The Hong Kong Stock Exchange helped 17 companies raise a total of HKD14.9 billion (US$1.9 billion) in IPO proceeds in the first three months of 2022 — down 89 percent year-on-year, according to stock documents emerges.
Despite an expected pick-up in momentum in the second half of the year, accounting firm PwC estimated that HKEX’s full-year fundraising volume would fall about 40 percent to as much as $200 billion, according to a report on Hong Kong’s capital markets released on Wednesday.
Recommended
HKEX CEO Nicolas Aguzin acknowledged the “very sensitive” geopolitical tensions between the US and China in a recent interview with the Financial Times. Aguzin said his priority is to persuade investors that China is open for business, despite Beijing sticking to its zero-Covid regime.
Hong Kong newspaper Sing Tao Daily first reported last week that two Chinese investment banks plan to lay off about 30 percent of their Hong Kong staff this year, affecting more than 100 employees in the banks’ departments.
Haitong International, CMBI and Guotai Junan International did not immediately respond to requests for comment.
Comments are closed.