If you’re an equities or fixed income trader at a global bank in Hong Kong or Singapore, you’ll probably want to forget Q4 2018. Not so fast. The fourth quarter, which was generally dire for trading revenues, continues to cast a shadow over the current job market. Bonuses are down for traders, hiring is subdued, and the threat of redundancies still looms, say recruiters.
Credit Suisse provides an extreme example of the Q4 decline. APAC fixed-income sales and trading revenues at the bank decreased 91% year on year, while equities revenues fell 28%. The Swiss bank was not the only firm to suffer as Asian markets tanked. At HSBC, which generates most of its profits from Asia, markets revenues fell 7% in 2018, with much of the decline happening in an “extraordinarily weak” fourth quarter, CEO John Flint told analysts last month, adding that Hong Kong had endured “particularly weak” equities markets. Another Asia-focused bank, DBS, reported “unfavourable market conditions” in Q4, as profits in its Treasury Markets unit slumped 68% for 2018. In OCBC’s Global Treasury division, profits fell 23% in Q4 versus Q3.
Suffice it to say, most traders at these firms are now taking home smaller bonuses than they did the previous year, say recruiters. But this is a sector-wide phenomenon – most banks in Singapore and Hong Kong are shrinking their bonus pools in both fixed income and equities. “Bonuses are down significantly – drops of 30% are not uncommon,” says Hong Kong trader-turned headhunter Matt Hoyle. “Fixed income employees have been much harder hit. Credit markets got absolutely hammered in Asia late last year, much more so than in the US. Asian trading revenues within FICC will be horrendous across the board,” he adds.
But if you’re thinking of moving to another bank after receiving a poor bonus for 2018, you might want to think again – markets hiring remains muted in Hong Kong and Singapore, say recruiters. While poor market conditions in fixed income late last year have already led to a few Hong Kong traders leaving banks such as Deutsche, HSBC, Standard Chartered and ANZ, they are typically going to the buy-side, says Ed Goh, team lead for sales and trading at recruiters Selby Jennings. And banks are no longer always replacing traders who move on, he adds.
Equities traders, meanwhile, remain wary of layoffs on the back of volatile markets. APAC equities products “suffered from particularly poor results” in Q4, according to a new report from data firm Coalition. Similarly, Schroders' Q4 Markets Review highlights extended losses in Asia (ex-Japan) equities, driven by concerns about the US-China trade conflict and the slowdown in Chinese economic growth. The Shanghai Composite Index ended last year 25% below where it started, making it the worst-performing major stock market in the world.
Equities traders have reason to be anxious. Banks in Asia have shown themselves all too willing to swing the axe over the past three years. Deutsche Bank made redundancies in its Asian equities team last year, while Credit Suisse culled dozens from its regional equities operations in 2017. Barclays, along with several other banks, trimmed Asian equities jobs in 2016. “Trading desks are still shrinking in Asia, and ever-increasing automation also continues to lurk in the background,” says ex-trader Hoyle.
If you’re looking to exit a trading job in Asia, you should “either join a very established franchise – such as Citi or JP Morgan – or focus your efforts on the buyside”, says Hoyle. “Many hedge funds and money managers also had a lousy Q4, so the timing isn’t great now. However, I still see buy-side demand for talented traders going forward,” he adds.
Goh from Selby Jennings says the jobs outlook within derivatives is “slightly more upbeat”. “American banks generally did well last year and have recently set up warrants and ETF market-making desks,” he says.
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