Bankers optimistic about jobs
markets.scmp.com
CATHY HOLCOMBE
--------------------------------------------------------------------------------
With air still wheezing out of the United States technology bubble, talk of restructuring has returned to Wall Street and other financial centres.
The tail-end of the Nasdaq Stock Market boom saw spiralling pay packages with the white-glove treatment extended even to junior analysts who last year won an array of unheard-of perks.
No wonder journalists are sniffing for blood. ING Barings is expected to announce major lay-offs in London this week, according to the Financial Times. Last week The Wall Street Journal said Credit Suisse First Boston would cut staff 8 per cent, including in the highly successful technology banking division run by Frank Quattrone.
If heads do start to roll on Wall Street and elsewhere, for Asian bankers the question is whether the axe will extend globally.
US houses have led the regional charge in technology investment banking and last year padded out specialty teams, with hiring focused on the technology zones of North Asia.
Overall Asian ex-Japan operations grew between 15 per cent and 35 per cent for CSFB, Goldman Sachs, Merrill Lynch and Morgan Stanley.
Will the markets out here justify such an army of well-paid US bankers?
The three biggest US banks in Asia by deal flow - Goldman Sachs, Morgan Stanley and Merrill Lynch - all say yes.
They would obviously hardly say anything different, but they have strong evidence on their sides.
The banks together made up 47.6 per cent per cent of equity and equity-linked deals in Asia excluding Japan and Australia last year, according to Thomson Financial Securities Data, and each already has their name on three major initial public offerings coming from the mainland this year.
Still, the China deals are in fixed-line telecommunications (China Telecom), oil exploration (CNOOC) and financial services (Bank of China). Will they pay the bill for a string of Internet specialists or high-technology bankers?
They do not have to, argues Brooks Entwistle, co-head of high-technology banking at Goldman Sachs. He says his team is working on more projects than they can handle.
"Our build-up didn't stop in April [when Nasdaq corrected]. We kept building to the end of the year," he said.
"The truth of the matter is that there are a lot of people beyond technology that work closely with our advisory group. So if anything we're still borrowing capacity from people."
Goldman is marketing a HK$1.14 billion initial public offering with a technology-focused H share, Travelsky Technology. A host of Hong Kong brokers with local distribution skills are also in the deal.
Mr Entwistle is confident the traditional mules of the Asian technology scene, the makers of semiconductors and computer hardware, will still provide bread and butter for the sector. Because of the high capital expenditure nature of these industries, "clearly there is a need to raise capital to continue expansion", Mr Entwistle said.
That sector saw a roller-coaster ride last year, with valuations in markets such as Taiwan and South Korea hitting all-time highs before clobbering falls after Nasdaq corrected.
Recently the stocks have begun to run again, as US interest rates fall.
Bankers say that they are also optimistic of business in mergers and acquisitions (M&A) in the technology sector as the burnt-out stars of last year may need the services of investment banks to find partners or buyers.
One example already seen this year is the purchase of South Korea's largest Internet auction operator by eBay of the United States, in a deal arranged with the help of Morgan Stanley. |
