Hong Kong Bankers Unemployed, Investment Slow, Business Gloomy

Jakarta, CNBC Indonesia – Business deals from China in Hong Kong have diminished over the past few decades. Banks and law firms are both reducing employment. Those remaining pursued smaller deals and took longer vacations.

“The golden era of successful bankers and investment advisors is almost over,” said Veronique Lafon-Vinais, an investment banker for more than two decades who now teaches finance at the Business School of the Hong Kong University of Science and Technology, quoted by The Business Times, Monday (27/11/2023).

The value of mergers and acquisitions in mainland China and Hong Kong has also fallen 6% to around US$185 billion (Rp. 2,874.04 trillion). This amount is likely the lowest amount in a single year since 2013 and no more than half the annual average since at that time.

In fact, the decline in initial public offerings (IPOs) was more extreme. This year is expected to be the worst year for Hong Kong debuts since 2001, with an IPO worth US$4.6 billion (Rp. 71.46 trillion). This amount is much smaller than the funds collected three years ago of US$52 billion (Rp. 807.84 trillion), and down 85% from the last 10 year average of US$ 31 billion (Rp. 481.59 trillion).

More than a dozen advisers who did not want to be named said that next year would remain challenging. Some of them even say that economic activity will not increase until at least 2025.

The impacts they cited were numerous, including increased costs of foreign funding; volatile markets; tense relations between Beijing and Washington; as well as President Xi Jinping’s crackdown on industries such as property, technology and finance.

Falling Hong Kong stock market valuations and tighter regulatory controls are also preventing Chinese companies from listing.

Recently, Alibaba Group Holding surprised investors by stopping plans for a spin-off and IPO of its cloud business worth US$11 billion (Rp. 170.93 trillion). The company cited US restrictions on chip sales to China as the reason for the policy reversal. The group owned by conglomerate Jack Ma said it would also suspend listings for its popular wholesale business Freshippo.

As a result of the decline in investment, industry players have become more frugal. Business class travel and large expenses have been reduced, and Zoom calls are increasingly replacing face-to-face meetings. They are also forced to make deals in countries and sectors they are unfamiliar with.

Additionally, as the size and frequency of business deals shrink, many advisors are taking advantage of what was once a rare commodity, free time. Hong Kong investment bankers are known to have traveled overland from the Kyrgyzstan/China border to Turkey for a month.

Another spent four weeks trekking in the Norwegian fjords and Canadian mountains on two separate holidays this year. The third took his family hiking in Italy and the Swiss Alps. Others took long journeys in New Zealand, Croatia and southern France.

However, behind having more free time, there are worries about the future.

“In the current climate of slow business deal flow and layoffs in the financial industry, people are likely to take long holidays, but I expect they are also worried about being away from the office for too long,” said Simon Kavanagh of BDA Partners.

(ayh/ayh)