Chinese investment banks are now attracting top talent, matching Wall Street lenders with their compensation packages as mainland lenders take on bigger roles in new Hong Kong listings, according to a senior Haitong International executive .

Of the 4,861 initial public offerings (IPOs) and other securities offerings in the five-year period to 2021, more than 65% were handled by mainland or Hong Kong-based investment banks, according to Dealogic.

“Many mainland investment banks can now offer a salary package similar to that of US or European lenders,” Kenneth Ho Shiu-pong, head of equity capital markets at Haitong International, said in an interview. The firm handled 215 deals between 2017 and 2021 and was the top arranger in 2019 and 2020, according to data from Bloomberg.

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Junior bankers opting for a career in mainland investment banking can have the same growth trajectory as their peers at their Wall Street rivals, he said when examining developments in the banking sector. Hong Kong’s investment bank since handover to China in July 1997.

Kenneth Ho Shiu-pong, Head of Equity Capital Markets at Haitong International. Photo: Xiaomei Chen alt=Kenneth Ho Shiu-pong, Head of Equity Capital Markets at Haitong International. Photo: Xiaomei Chen>

Compensation at mainland investment banks has quickly caught up with Western rivals and has become fiercely competitive in recent years, according to recruiters.

“Many experienced bankers and young people on Wall Street like to join mainland investment banks with an eye on their future careers,” said Jerry Chang, managing director of executive search firm Barons & Company, noting that Chinese companies will continue to be the source of new listings in Hong Kong.

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Haitong International brought the most transactions to the Hong Kong market in 2019 and 2020, according to Bloomberg rankings. It ranked second last year in terms of funds raised and number of new listings ahead of CMB International Capital and Goldman Sachs, China International Capital Corp took the crown.

Ho, 45, is among those who have made the switch from western banks to continental banks.

Born and raised in Hong Kong, Ho graduated with a bachelor’s degree in computer science followed by a master’s degree in finance, both Australian. There he worked briefly as an analyst at State Street Global Advisors. He worked at DBS Group, Cazenove Asia and Standard Chartered after returning to Hong Kong, before joining Haitong International in 2012.

“At the time of the transfer, almost all IPO transactions were handled by the big Wall Street lenders,” Ho said, while many mainland financial companies only started expanding in Hong Kong. over the past 10 to 15 years.

Haitong Securities entered Hong Kong by taking over Tai Fook Securities in 2009, renamed Haitong International a year later. Everbright Securities invested in Sun Hung Kai Financial in 2015, which has now been renamed Everbright Securities International.

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In the 2000s, international investment banks joined forces with their continental counterparts to close deals. In recent years, however, the tide has turned, with continental banks playing a more dominant role than US or European banks.

“Every three out of four new listings last year saw mainland investment banks act as sponsors, which shows their importance,” Financial Services and Treasury Secretary Christopher Hui Ching-yu wrote on his blog last month. “With more and more US-listed mainland companies choosing to return to Hong Kong, their role is more important than ever.”

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The change in fortunes is very much tied to local market developments, with mainland companies accounting for 98% of funds raised last year, up from 50% a decade ago, according to Refinitiv data. Chinese companies now account for more than 80% of market capitalization and revenue, up from 15% in 1997.

Haitong’s Ho said mainland companies like to hire domestic banks as list sponsors because they understand the background and culture, noting that his team has tripled since joining in 2012. “Mainland investment banks act as a bridge to the world and back to China.”

Mainland investment banks as well as their Western counterparts all suffered from the scarcity of IPOs in the first half of this year. Hong Kong, the world’s largest IPO market seven times in the past 13 years, fell to tenth in the first half as funds raised fell 92% year-on-year.

“We’ve all suffered from bad market sentiment and the sharp decline in new listings this year,” Ho said, adding that his company helps corporate clients raise funds through global certificates of deposit in Switzerland, Switzerland. Germany and London.

“There is a stereotypical notion that mainland investment banks only do business for mainland companies and can only serve mainland investors. In fact, we have offices in six international markets, including the states United States and London, and have brought in international fund companies and others as grassroots investors for many new listings.”

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice journal on China and Asia for over a century. For more SCMP stories, please explore the SCMP app or visit the SCMP Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.