As job cuts continue to savage equity sales and trading jobs in Asia – Standard Chartered, Nomura and CIMB have all laid off staff this year – the hiring of equity research analysts who cover A-shares on Shanghai’s surging stock exchange is on the rise. This niche spike in recruitment comes as banks seek to provide local and global investors with more in-depth analysis of A-share listed companies.
Morgan Stanley, for example, is hiring up to 20 associates as well as some VP-level research analysts, across a range of sectors, as it looks to expand its A-share coverage by 50% to 100% in the next 18 months, according to an internal memo seen by Finance Asia. Its existing 50-strong China research team doesn’t have enough people with knowledge of A-share listed companies that it may include in its future coverage.
Morgan Stanley is not alone among global banks. “Firms like UBS, Credit Suisse, Nomura and BNP Paribas have been busy interviewing analysts this year to strengthen their China coverage in industries like consumer, technology, infrastructure, healthcare and financial institutions,” says a headhunter with knowledge of the banks who asked not to be named. “China banks like CICC are doing the same and poaching from international platforms.”
Shanghai’s stock market has surged by 31% and trading volume by 10% since the launch of Shanghai-Hong Kong Stock Connect, a scheme allowing investors in each market to trade shares in the other one, in November. “Demand is rising for A-share equity research analysts because of Stock Connect and the recent Shanghai stock rally,” says Alistair Ramsbottom, managing director of Shanghai search firm The Blacklock Group. “The number of A-share companies covered by banks is growing and there’s increasing awareness of the A-share market globally.”
Most A-share research analyst jobs are based in Shanghai or Beijing, although demand is also rising in Hong Kong. “Researchers need to provide hesitant investors with rigorous due diligence and transparent governance in evaluating mid-to-small capitalisation companies,” says Stanley Soh, a Hong Kong-based country director of financial services solutions in Asia. “Due to the nature of this work and the need to sometimes conduct due diligence via onsite visits, many are based on the mainland.”
[efc_twitter text="Recruiting and retaining research analysts who cover A-shares isn’t easy"], however. “Recent graduate intakes at global banks haven’t given them enough analysts who speak both Mandarin and English and understand both international and domestic compliance standards,” says Soh. “Because of the shortage of junior talent, moving from bank to bank is prevalent among the top analysts.”
Chinese analysts covering the Hong Kong stock market aren’t necessarily a good solution to the shortage. “There are actually many PRC nationals who are China analysts covering H-shares in Hong Kong, but not many of them really know the domestic-listed companies and more importantly how the A-share market operates relative to the H-share market,” explains Ramsbottom.
And while there are now more Hong Kong nationals looking for analysts jobs following equities-related redundancies in the city, banks are reluctant to recruit them into A-share roles unless they speak Mandarin. “And they may not be keen to take these jobs if they’re based in the mainland, especially from an income-tax perspective,” says Ramsbottom.
With a limited pool of candidates, banks are enticing analysts with above-average salary rises. They are also hiring from other sectors, in particular corporate development, consulting and accounting, says Soh.