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IPO
BusinessBanking & Finance

Stress and despair: new year, old wounds for Hong Kong bankers with IPO market in slump and windfalls elude investors

  • ‘The environment is very stressful right now, particularly for young investment bankers, says Jerry Chang, a consultant at Barons & Co
  • The landscape has shifted considerably since the last quarter, with an overall decrease in hiring across the investment banking sector: Robert Walters

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Illustration: Brian Wang
Mia Castagnone
Hong Kong’s market for initial public offerings (IPOs) is suffering from another sluggish start in 2024. Once a beacon of hope for retail investors looking for a windfall and a lucrative source of fees for investment bankers, listings have instead become a source of stress and job insecurity due to a drop in such activity.
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This year, five companies have raised HK$2.18 billion (US$279 million) from their stock offerings in the first two months, according to data compiled by London Stock Exchange Group, the slowest momentum since 2011. In mainland China, 18 IPOs generated 15.2 billion yuan (US$2.1 billion), the least since 2016 at this stage. In contrast, the US market is enjoying its best run in three years, with 26 IPOs and US$6.3 billion in proceeds.

Hong Kong-based bankers have expressed concerns about the state of the market. One industry veteran said his peers are in “survival mode,” while waiting for the market to recover in the second half of the year. A junior banker said it has been difficult to win deals, especially if one is too focused on the Hong Kong IPO market. They declined to be named, because they are not authorised to speak to the media.

Jerry Chang, a human resources consultant Barons & Co in Hong Kong. Photo: Handout
Jerry Chang, a human resources consultant Barons & Co in Hong Kong. Photo: Handout

“The environment is very stressful right now, particularly for young investment bankers,” said Jerry Chang, a human resources consultant at Barons & Co in Hong Kong. “You can imagine, deals are not going through and bankers are not earning commission fees and high bonuses like they used to.”

Wall Street investment banks have seen some significant lay-offs. Goldman Sachs’ headcount fell 7 per cent globally in 2023, while Morgan Stanley and Bank of America reported a 2 to 3 per cent drop. Those who managed to retain their jobs have suffered a 40 to 50 per cent cut in total compensation.

It’s a daunting task for Bonnie Chan Yiting, who was promoted to the top post as CEO of bourse operator Hong Kong Exchanges and Clearing (HKEX) on March 1. A lawyer by training, the 54-year old executive has seen the slump first-hand as IPO proceeds more than halved to US$5.9 billion last year, and compared with US$51.2 billion in 2020.

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