Investment Banks Cut Dozens of Jobs in Asia Amid China Slowdown

Investment banks like Morgan Stanley and HSBC are cutting jobs in Asia-Pacific due to a slowdown in deal-making and weaker markets in China and Hong Kong, highlighting the challenges facing the industry in the region.

Quadri Adejumo
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Investment Banks Cut Dozens of Jobs in Asia Amid China Slowdown

Investment Banks Cut Dozens of Jobs in Asia Amid China Slowdown

Morgan Stanley and HSBC are cutting around investment banking jobs in the Asia Pacific region this week, as they ramp up cost-cutting measures amid weaker deal-making and sluggish markets in China and Hong Kong. Morgan Stanley is cutting around 50 investment banking jobs, affecting around 13% of its Asia investment banking workforce, while HSBC is expected to see the departure of around 30 dealmakers in the region.

The cuts are among the largest for the two banks' China-focused investment banking teams and follow similar measures by other banks, as the top listing destinations for Chinese companies face a drought in deal-making and shrinking valuations. Hong Kong's stock exchange saw a 30% drop in initial public offerings (IPOs) in the first quarter, with Chinese companies raising 80% less via IPOs compared to a year ago. The total value of merger and acquisition deals with China involvement has also shrunk by 36%, leading to smaller fees for bankers.

Why this matters: The job cuts highlight the challenges facing the investment banking industry in Asia, particularly in China and Hong Kong, as a slowing economy and geopolitical tensions impact deal-making activities. The layoffs highlight the broader trend of global financial firms reducing their presence in the region and focusing on cost-cutting measures to navigate the challenging business environment.

A new round of job cuts in years that began in late 2023 on the Chinese mainland and Hong Kong, key regional investment banking hubs of Western banks, is set to gather pace this year according to bankers and recruiters. The planned cuts come as China's economy is struggling to establish a firm footing due to a prolonged real estate crisis and persistent doubts over growth. Morgan Stanley reported a 12% decline in net revenue from Asia in the first quarter.

Global financial firms are seeking to reduce expenses amid a deal drought and have been cutting investment banking staff in Asia due to deteriorating US-China relations, a crackdown on private enterprise, and a property crisis. HSBC, UBS, and Bank of America have also made job cuts in the region this year. Despite the layoffs, Morgan Stanley is gradually building its onshore China business, having won approvals for principal trading, research, and other licenses in the past year.

The China research pullback is also threatening analyst jobs due to the research pullback, as global investment banks scale back their China research operations. This trend is driven by factors such as increased regulatory scrutiny, rising costs, and a shift in investor focus away from China. Many China-focused analysts are facing uncertainty and potential layoffs as a result of the pullback in research coverage.

Key Takeaways

  • Morgan Stanley and HSBC cutting around 50 and 30 investment banking jobs in Asia-Pacific.
  • Job cuts due to weaker deal-making and sluggish markets in China and Hong Kong.
  • Hong Kong IPOs down 30%, China M&A deals down 36%, reducing banker fees.
  • Global banks reducing presence in Asia, focusing on cost-cutting amid economic challenges.
  • China research pullback threatening analyst jobs as banks scale back operations.