Growing pressure to either downsize or exit parts of this business altogether.
Even by the boom-bust standards of Asia’s equity business, it’s been a turbulent 12 months.
Bloomberg News reports that at this time last year, the industry was riding high as China’s stock market soared, volumes jumped to records and some of the biggest names in finance boosted hiring. Now, turnover is shrinking at the fastest pace since at least 2006 and banks are under growing pressure to either downsize their Asian equity desks, or exit parts of the business altogether.
Investors and issuers are retrenching after Chinese shares crashed, the Federal Reserve tightened monetary policy and divisive political debates from the U.S. to Britain weighed on sentiment. Revenue from trading stocks in China and Hong Kong could fall 30% to 50% in the first half from a year earlier, according to senior executives at four firms who spoke on condition of anonymity. Equity derivatives sales in Asia are on track to drop at least 50%, while prime brokerage is down roughly 20%, two of the executives said.
"Because overall revenue is down, further cuts are likely across the industry,” said Taichi Takahashi, Asia-Pacific head of equities at UBS in Hong Kong. “Some second-tier players will throw in the towel because their market share is shrinking."
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