Hong Kong 2007: Going up and going down
Changing jobs during a bull market and snaffling the fat pay premium on offer is easy - but what happens when the markets drop? Here are the sectors that could win and lose in the months to come:
"2006 saw the balance of power tilt back to the investment banks. Bankers who left for hedge funds are beginning to slink back without getting any special premiums," says Kevin Yeung, a consultant at search firm Whitney Group. Yeung adds that investment groups have done a good job adapting to the challenge of private equity and hedge funds by setting up their own in-house organizations.
Mandarin-speaking bankers will be hot property in 2007, particularly if they're familiar with executives in China's mid-sized companies. With a reduction in giant state privatizations on the card, Nick Green, partner at recruitment firm the Laurus Group in Hong Kong, says people with relationships in the mid-cap sector - the next big source of potential IPOs - will be top of banks' shopping lists.
Where there's a millionaire, there's a private banker. "One of the most remarkable developments over this bull market is the rise in Asian high net worth individuals with up to $50 million to invest," notes Guy Roberts, CEO of Pelham Search International. A few years ago, he says a few million was the norm. Expect private banking jobs to swell as a result.
The Asian continent has been swept by a wave of nationalism, which is hampering the sell-off of strategic assets to foreigners. The fact that private equity fund Lone Star had to cancel the sale of Korea Exchange Bank to Kookmin Bank, and that the Thai president was forced out by a coup by the sale of his company to the Singapore government's investment entity, Temasek, goes to show that what should be a huge M&A market could continue to disappoint. "The quick money will always be the IPOs rather than the M&A," says one recruiter.
Leaving the security of an established organisation:
The money may be good, the kudos may be fabulous, but beware small private equity funds and hedge funds which may be here one day and gone the next. Jason Orange, partner at the Laurus Group warns: "The temptation is now with the younger guys is to leave jobs at well-established investment banks to get into smaller private equity operations who have only been up and running for a year or so. Those with memories of the dotcom boom will remember that leaving one's job for such an outfit can be dangerous."
The days of superstar equity researchers ended messily in the early noughties. Don't expect a resurgence anytime soon. "Research stopped being as attractive salary-wise after corporate governance reforms in the US blocked primary-market related bonus compensation," points out Jones. That division between deal generation and research is unlikely to be relaxed next year.