HONG KONG – Hong Kong investment bankers could face more job cuts as the slowdown in China deals persists and employers look to trim highly compensated staff, according to Bloomberg Intelligence.

An estimated 200 Hong Kong bankers lost their jobs in the past year, senior analyst Francis Chan wrote in a report published on April 22. With pay for senior bankers 40 per cent to 70 per cent higher than what peers receive in Singapore, Hong Kong bankers may find their compensation becoming a “curse” as employers cut back, Mr Chan wrote.

“More global banks may further trim workforces in the city to achieve bigger cost savings, especially during China’s slowdown,” Mr Chan added.

Global financial firms have been cutting investment banking staff in Asia due to a deal drought amid deteriorating US-China relations, a crackdown on private enterprise and a property crisis. Morgan Stanley and HSBC Holdings are among companies that have made cuts to their investment banks in April, with Hong Kong and China bearing the brunt.

Initial public offerings (IPOs) have been depressed in Hong Kong, with proceeds slumping to the lowest in more than two decades in 2023. The money raised from IPOs fell another 29 per cent in the first quarter to about US$605 million (S$823.6 million), the worst three-month period since the 2008-2009 global financial crisis.

While there are a higher number of IPO applications in Hong Kong, IPO prospects for the city “may remain dire”, the report said.

US dollar and Hong Kong dollar bond issuance in Hong Kong have fallen significantly from the peak in 2020, according to Bloomberg Intelligence.

Investment banking analysts and associates in Hong Kong made 30 per cent to 100 per cent more than peers in Singapore, mainland China and Japan, while directors and managing directors made 40 per cent to 70 per cent more, according to a Hays Asia survey in late 2023.

In comparison to investment banking, the job market in wealth and private banking remains stable, with mainland wealth funds flowing to Hong Kong, benefiting banks including HSBC, Standard Chartered Bank and Bank of China (Hong Kong).

“Hong Kong’s finance professionals could face diverging fates due to different prospects for its capital markets and wealth management sectors,” wrote Mr Chan. BLOOMBERG