Shenzhen-Hong Kong Stock Connect: what it means for your banking job

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Shenzhen-Hong Kong Stock Connect

It’s been a long wait, but today Shenzhen-Hong Kong Stock Connect has finally arrived – and it could trigger another boom in research analyst jobs at global banks in Hong Kong.

When a similar programme linking the Shanghai and Hong Kong exchanges was launched in November 2014 large investment banks “hugely expanded” their coverage of Chinese A-shares, says former Deutsche and UBS banker Benjamin Quinlan, now CEO of Hong Kong consultancy Quinlan & Associates.

History could now be about to repeat itself, albeit on a slightly smaller scale.

“Before Shanghai-Hong Kong Stock Connect, global banks without an onshore Chinese brokerage typically covered about five to 10 A-shares from Hong Kong, but that’s surged to around 150 or more,” says Quinlan. “Credit Suisse, Goldman Sachs, UBS – the only ones onshore in China – now cover between 400 and 500 Chinese companies.”

As with the Shanghai scheme, banks in Hong Kong will try to dump more work on current research analysts – but they will also need to hire.

“Demand for coverage analysts has been strong since 2014, and Shenzhen Connect will see a further surge,” says Quinlan, who worked on Deutsche's Shanghai strategy. “It bodes well if you’re a Chinese speaking analyst looking for a job at a bank in Hong Kong, but the banks will find that research talent is thin on the ground.”

If you cover technology you could be particularly sought after. Tech stocks made up almost 20% of Shenzhen’s stock market compared with just 4% in Shanghai.

“If market turnover rises and institutional money flows into Shenzhen-listed tech stocks, the number of A-share tech names covered by banks in Hong Kong will increase,” says Jairaj Singh, a manager at recruiters Connected Group in Hong Kong and a former ANZ analyst. “So longer term there could be further hiring of tech analysts.”

Small-cap coverage may also need to increase, says Singh. “If there’s more speculative mainland money flowing into Hong Kong stocks, I believe small caps may benefit. Small/mid-cap analysts have virtually disappeared recently, but there could be a revival.”

Meanwhile, the legions of mainland and local brokerages in Hong Kong may also have more vacancies in the wake of Shenzhen-Hong Kong Stock Connect

“When it was approved back in August, we saw increased hiring at brokerages such as Bright Smart Securities International,” says Stanley Soh, a Hong Kong-based regional country director of financial services solutions in Asia. “These brokerages – some 400 of them – are hiring more sales brokers to capture market share.”

And what of jobs across the border in Shenzhen?

Stock Connect could be the catalyst to eventually make the city – which has more than 10m people and the world’s eighth largest stock exchange – better able to compete with Shanghai as a mainland finance hub, says Jason Tan, a partner at search firm Carlson Harriet.

“It will create new jobs in Shenzhen: equities traders, fixed income traders and quant traders, as well as FI and equities salespeople,” he adds. “It will mainly be CICC, CITIC and other top-30 securities players – rather than Western banks – expanding in Shenzhen and offering new services and products to take advantage of this new channel.”

Image credit: real444, Getty

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