Economic stimulus pledges may have sent the stock market surging recently but investors are fickle so the bullishness is likely to be ephemeral, said the former hedge fund professional. — Reuters
HONG KONG: Disillusioned Chinese bankers and fund managers are giving up careers in a finance sector where government campaigns and regulation have coloured prospects to the extent that areas as varied as education and even stand-up comedy seem preferable.
Tightening scrutiny of trading, financing and dealmaking as well as a slump in stock turnover in a sluggish economy has dried up private equity and venture capital and decimated the market for stock market listings, bringing pay and job cuts.
After three years in a directionless capital market, Xu Yuhe, partner of Deep Water Fund Management, switched to the more predictable business of helping students study overseas.
Economic stimulus pledges may have sent the stock market surging recently but investors are fickle so the bullishness is likely to be ephemeral, said the former hedge fund professional.
“Educational services is a stickier business,” said Xu, who aims to tap into “a growing trend for people to study or migrate to Hong Kong or Singapore” for an international experience in an affluent, nearby and culturally similar location.
The US$67 trillion financial sector has borne the brunt of various initiatives, in particular the “common prosperity” campaign launched in 2021 aimed at closing the wealth gap, with measures including caps on salaries and clawing back of bonuses.
At present, the hedge fund industry, for instance, is the target of a clamp down on computer-driven quant trading which regulators said could treat retail investors unfairly.
A campaign to identify weak hedge-fund operators contributed to thousands folding over the past year, official data showed.
Many hedge funds could not even benefit from the record-breaking stock market rally as data-based strategies failed to predict surprise policy shifts, leaving short positions in loss.
The market-supporting stimulus is “a very short-term measure to win the hearts of the retail investors,” said Jason Tan, Shanghai-based director at headhunter REForce Group.
“I have spoken to enough bankers. They know ‘common prosperity’ is here for good and the days of high-paying banking jobs are over. Banking talent has started to seek roles overseas or transition to less regulated industries,” Tan said.
The US$4.4 trillion mutual fund industry has also seen “significant turnover” among fund executives and portfolio managers as companies focus on compensation reviews and cost control, fund consultancy Z-Ben Advisors said.
China Merchants Fund Management, one of the 10 biggest in terms of assets under management, has asked senior executives to return pay received over the last five years that exceeds a new “common prosperity” cap, Reuters reported last month. — Reuters
