People Feature: China, alternatives top of firms' hiring plans in 2018
Article published on January 3, 2018
By Ysrael Dumasig
Fund houses in Asia Pacific are expected to grow their onshore teams in Asia this year and fill any gaps in markets where they have an established presence, recruiters predict. Hiring for institutional sales roles targeting the Chinese market particularly will continue to be a main part of many global and local companies’ plans as they look to capture the growing sales opportunities in China.
There could be increased hiring activity in the alternative investments space as global managers look for products, sales and client services staff to diversify their offering in Asia and replicate success they have had in Europe and the U.S..
While Asia’s financial technology (fintech) space may continue to grow, it might not bring that much of an impact to asset management companies’ hiring strategies in the coming year, recruiters add.
Continued China focus, regulation boost
Hiring activity in the region is going to be reasonably positive this year, according to John Mullally, Hong Kong-based director for financial services at Robert Walters, as global managers that are already well placed in local markets focus their efforts on growing their onshore teams.
People who have proven capability and experience or existing relationships with some of the larger institutions in mainland China will be in high demand, as more Chinese institutions are allocating assets to foreign managers, Mullally says.
William Chan, Hong Kong-based consultant for asset management front-office recruitment at Morgan McKinley, sees Chinese fund management companies growing their workforce at a more rapid pace than global managers.
Roles in institutional sales as well as intermediary sales continue to be in demand as fund managers look to drive their business and expand their client pool in China, he says. He also predicts that, while equities continue to be the core of many fund managers’ business especially in Hong Kong and China, there will be a massive growth in the fixed-income market this year due to interest rate fluctuation, which could also lead to increased hiring in this side of the business.
The overall global market outlook for large fund houses also has a role to play in hiring decisions, Chan says. While there is still uncertainty in some European markets due to Britain’s exit from the European Union, China as well as Japan and South Korea continue to grow at a healthy pace, so firms will want to take advantage of this growth by adding resources in the region, he adds.
Robert Walters’ Mullally also believes recent positive regulatory changes by the Chinese government give global companies more confidence and impetus to hire more quickly in China.
Not only are numerous companies now permitted to launch and sell onshore funds in China’s private fund market, the promised increase in foreign asset managers’ ownership stakes in Chinese entities also could mean global companies are willing to invest more resources to hire and grow their joint venture asset management businesses in the country, he says.
In November last year, Chinese authorities vowed to reduce or eliminate foreign ownership restrictions on financial services groups, including asset managers, which will allow foreign entities to take a 51% stake in fund managers and securities and futures firms, currently capped at 49%.
Growing interests in alternative investments
Arnaldo Oliveira, Hong Kong-based CEO and founder of Orion Executive Search, believes 80% of the asset management hiring in the region this year will be replacement hires but says one area where firms will be looking to grow teams will be in the alternative investments space, especially for real estate. “A lot of asset management companies focused on the fixed income or equities side are trying to get into alternative investments,” he says.
The roles focusing on the alternative investment side would mostly be in products, sales and client services, he adds.
Robert Walters’ Mullally echoes Oliveira’s comments, adding that, while traditional equities and fixed-income strategies are still a core part of their business, global managers have been working on their private equity, real estate, hedge fund and quantitative-driven investment strategies to provide their investors with a diversified set of investment opportunities.
The growing interest in the alternative investment space is largely due to increase in demand as Asian investors look to diversify their portfolios, he says. But it’s also a case of global managers trying to replicate the strategies they’ve employed in Western markets.
In many respects, U.S. and European fund managers are still ahead of Asia when it comes to developing different types of alternative investment strategies, but more of these ideas are being exported to Asia or Asian managers looking to copy them, and firms need to add more resources to do this, says Mullally.
While developed markets such as Singapore have led the way in the strong growth of demand and hiring for alternative investments, other asset management companies in other emerging markets, such as India, are now rapidly expanding their alternatives capabilities, Mullally says. In fact, in the past year, top fund managers in India have been dipping their toes into the alternative investments space. Franklin Templeton Investments, DSP BlackRock and Reliance Capital have appointed key people to head their divisions dedicated to alternative investments, as reported.
Effect of fintech, automation on hiring
While Asia’s fintech industry continues to grab headlines, often for faster and more innovative development than in Western markets, Orion’s Oliveira doesn’t believe asset management companies in Asia will hire fintech professionals in any significant numbers this year to develop this part of their business.
When it comes to asset management companies investing in fintech solutions, it has mostly been talk rather than action, according to Oliveira. “People talk about online payment, blockchain and artificial intelligence, but so far talk is all that I see right now,” he says.
Oliveira still sees much potential for fund houses to develop their fintech capabilities, but the real question is how many companies are willing to pay for the right fintech talent to join their firm, he adds.
Will Tan, Singapore-based managing director at Principle Partners, shares Oliveira’s sentiments and says while fintech has incrementally been changing things, its impact on asset management companies’ hiring plans hasn’t been that big.
He adds, however, that fintech should not be ignored, particularly in markets such as Singapore, which has been taking steps to make fintech more relevant and help tech companies set up in the country, establishing itself as the regional fintech hub.
In October 2017, the Monetary Authority of Singapore launched an Industry Transformation Map, which aims to boost productivity, promote bigger growth and spur 1,000 fintech jobs every year until 2020.
Singapore, however, may find stiff competition from China, which is predicted to lead the region in the robo-advisory fintech space with US$500 billion in robo-advisory assets by 2021, as reported.
With the advancements in operations technology and research practices, many roles may become obsolete because algorithms can well replace traditional functions, such as analyst and financial modelling, in the future. This so-called work automation will continue to disrupt and might affect a few jobs, Tan says. “I expect some jobs to be lost, but it’s not going to be large-scale.”
Some of the roles that may be affected are those that deal with the covering of large-cap stocks where information is readily available.
Morgan McKinley’s Chan, however, says fund management professionals should not worry about work automation or computer-run algorithms taking over their jobs in the foreseeable future. Asset management has always been relationship-driven, and people in the industry often know each other, which plays a huge part when it comes to recruiting.