The future of Hong Kong high finance

if you’re a foreigner it’s actually easier due to language requirements

Would add that it's possible for S&T or HFs but no way for IB as the majority of fees are from China deals. If HK is going to lose, it will be Shanghai that benefits.

no its not gonna exist because lots of Americans and Europeans will refuse to work there now based on the recent laws passed there.

Prospect in IB - Gen:

lol while I completely agree, you pretty much lose your freedom of speech while working there. But I would be studying there for a year anyway. I think it would be pretty similar to working in China - high deal flow along with an exposure to Asia markets. The big question is whether the good international mix of population would still exist.

LMAO, while you pretty much lose your freedom of speech and individual rights.....BUT.....

Nothing is worth that.

To anyone that’s not aware - the CCP literally pays people like this 50 cents per post to defend these bullshit policies and the Chinese government as a whole. There are some hardcore nationalists out there that will do this for free too, but pay no attention to them. Most common comments look like this or point out some perceived “hypocrisy” of the west.

Yes, he was talking about livestock but the chinese have a "history" with the term "chinese pigs" given that was what the japanese called them when they invaded China back in WW2. It might seem like water under the bridge now to outsiders but given the rampant nationalism in China, that's not the case

Chinese pig has a cultural derogatory connotation

Absolutely. I did a US job hunt trip in September,and again in February. I need to re-read the WSO networking guide and do Zoom-based outreach to my b-school alumni. The search must begin.

I think you might have a chance for employment as a new graduate. New grads are seen as more malleable. But it's going to be a lower probability than if you were applying in NYC/London, and you're going to be far less sought after than mainland Chinese candidates. I don't want to piss on anyone's dreams. Maybe you'll be one of the ones who comes out here and makes it, so by all means try. But I think the odds of making it into IBD are very slim. In S&T maybe there's a chance. And maybe there's a chance if you're a quant. But as an example, let's say you've got some TMT experience (maybe an undergrad major in CS, or internship experience). GS's TMT team fields 28 people. Of the 28, only 2 are not mainland Chinese. Actual figures by the way. One is the team head, who has been around for decades, and he's from India. He sort of is grandfathered in by being in the team for decades back from when the city was more cosmopolitan. He was real excited when we spoke, because he just finally managed to hire their first non-mainland in years - an analyst to cover India. The other 26 people are mainlanders. So good luck cracking into a team like that if you're not a mainlander. PWM - ok maybe you have a shot. But they only were giving out offers last I checked in Shanghai or Beijing for mainlanders, and no new seats in HK. So I'm just giving you a realistic portrait of numbers.

S&T - sure this is where foreigners are still able to find work. And that's where you have more of a chance. S&T as a sector is shrinking though. So you're going to be gunning for a small number of seats in a shrinking headcount environment. Perhaps you can land in a HF, or a pan-regional PE firm. Or REPE. I'm not here to discourage you from trying. I'm just giving you insights into the stats. I'd not put all my hopes on a job in this city. I contrast this to 2005 when I first came out. It was not a slam dunk as even then there was preference for mainlanders. But at least then the environment was a bit more welcoming. Now it's much harder. Not discouraging you from trying, but just make sure you know the game and have a plan B.

Now, it's a different matter if you're of another Asian ethnicity and speak the local language. There will always be a place somewhere in HK for a Korean, Thai, Japanese, Malaysian person who can round out a FOF team, a pan-regional PE team, an equity research desk, etc. to give non-China coverage.

As for me, I'm not sure how to play it. As I've mentioned, for family reasons HK is quite ideal. USA would be really taxing on my wife and son. Maybe if I manage to move us to Flushing they wouldn't mind it as much, given the common language and culture. Right now I'm applying to roles in SG, but it's a smaller market and it's harder than before to get an employment pass. So I'm stilll trying here in HK, and also sendign applications and emails to roles in the US. COVID has made that more challenging. Not sure how many firms want a 40-y.o. mid-level PE dude who they can hire without having worked together in the past. I fear it's not a lot of buyers on that offer.

There's a mainland Chinese group that's investing in the US that has floated the idea of me being CIO. But that means working for a mainland Chinese organization, and I'm not a fan of that idea. But I may take it out of necessity.

I had been talking to one startup about joining as CEO but we never came to terms so that's kind of died on the vine.

Re PE here in HK I've not been taken seriously as a deal professional in years. All the mainlanders see laowai as is either a fundraiser or some professional services guy. I'm not a fan of doing fundraising yet again, though it seems now that's been the bulk of my career, unfortunately.

So I am hanging out now in HK, doing a bunch of consulting projects which take me about 60-80 hrs/week, but pay about 1/2 of my last salary. And I'm waiting to see what happens with HK and with my overseas (mostly US) applications via Zoom and email. And I'm grateful for the paid work. That said, when I see how much even 2nd year analysts on this site are getting paid, I really start to question my life decisions.

Also interested in this and curious if internships (at associate level) exist in SG IB?

Mba associate is almost non-existent in Asia these days. Some firms may offer it but chances is extremely low and competitive.

If you have done IBD before your MBA, then it is more likely to join laterally. Otherwise you have close to no chance because they don't have campus associate opening and it is very difficult to convince anyone to hire an outsider with no experience vs an analyst who have gone through 10-3am analyst years.

Work authorization is not an issue at BB in SG.

BB in SG for assocs mostly A2A and laterals from regional / MM banks

as a white person, am i allowed to use the term hongkies

As a hongkie myself with experiences working in SG, I can tell you the schooling system and working culture in HK is a piece of cake vs SG.

Singaporeans are very used to the cut throat system there and for them failure is a part of natural selection. You don't see so many kids jumping off building because they have been taught that way since day 1 (unlike HK). In SG, they were taught if you don't perform, we can beat HK, we can't sustain GDP #1 and other SEA countries will catch up.

Their system pushes them to be best kids. The system tells them if you don't study extremely hard, you are fucked. If you don't have good extracurriculars, you are fucked. And then when everyone is studying so hard with loads of activities, you are just a mediocre kid being one of them, so parents push these people further. If you spend your early childhood in HK, chances of suiciding is higher if you suddenly move to a SG schooling system because you lack the pressure tolerance they teach since early childhood. If I have a kid, I would rather send them to SPCC instead of Raffles even I know Raffles produces 40+ oxbridge a year.

Look at IBD as an example, very few in HK with knowledge of SG working environment would go there. The typical hours there are like 2-3 hours longer. I once had an SG analyst under me. He told me during his SA, he slept in office for half of the internship. While he is an outlier, others are not much better than him, loads of them still up at 5am. They have a stronger culture than HK in terms of working for the sake of working. Even in other posts, you will sometimes see WSO kids from SG asking if they can apply to HK and there is a reason.

P.s. I doubt there are only 10 hongkies a year in s&t. Back in a few years ago, cuhk and ust qf each produces 8-12 s&t Hongkie interns a year. Adding other majors such as gbus and bba and also addint in HKU/foreign unis, the numbers should be around ~30

earthwalker7:

Truth be told even IF you're fluent, you'll never be truly native or seen as a local. And it's fair right? If you're doing PE in China, you'll be negotiating with CEOs who prefer to sell a piece of their company to someone they trust. That means they would rather sell to someone from their home province. Certainly not some weird foreigner. Same thing for most IBD. If you want to be guided along the IPO path it's generally more comfortable to be guided along by someone who is from your home province. Business is always about human interaction and relationships, so it's going to be easier for a local to build those. I guess I just like HK and am comfortable enough, but for sure I've overstayed by a decade.

THIS. (+SB)

As someone who speaks multiple Asian languages and has sat in various roles in financial services and had most of my career in Asia (I recently got out - it was NOT easy), I cannot stress these points enough. Having met and spoken to @earthwalker7 in person, everything stated in this thread is super spot on.

Unless you are native or somehow well connected strategically (in which case you are not on WSO) forget building a real bigshot kind of Asia career unless there is some big link for you to represent the mothership from your own country (which means you are on temporary secondment or super senior and going as a figurehead), or maybe in something like S&T (which is dying - but you are the trusted voice to like the Paul Tudor Joneses of the world - literally) or in a HF, or raising capital (where you will be the trusted foreign face/well paid babysitter/admin person and nothing else, really).

Doesn't matter if you speak native level Korean/Mandarin etc if you don't LOOK the part. Even more so if you don't come from the right background (family connections, going to the right school etc). Parents were diplomats and you speak native level Korean and know all of the mannerisms since, well you were born and raised there, but have blond hair and blue eyes? Yeah, sorry. No sale.

Asia - and this includes HK/SG are NOT the "West" and by that, I very narrowly mean the US/Canada/UK/OZ. The "Western" places I just mentioned have an active history and culture of immigration. You can essentially come from anywhere, work hard, get a passport and have the rights of citizenship. Sure it may be impossible to get into a country club or a cop may shoot you, but you can, with a lot of luck and a lot of hard work, become a senior government official, or lead a large company, or do deals at high levels despite looking different. Because people increasingly don't care what you look like or where you are from. Ok, they kind of do, but they are used to seeing different looking people and dealing with them, often on a daily basis. As customers, counterparts, etc etc.

This is NOT the case in Asia. Like mentioned above, the Chinese pet food company in Shanghai will only want to deal with Mainland Chinese people, very strongly preferably from Shanghai, who are connected to other people from Shanghai that can also help them out. Not from Shanghai? You had better be the best of the best of the best from Mainland China and be able to do a much better job than your Shanghainese competition and be able to make the dude like a TON of money. No one else need apply.

Multiply that sentiment by, well, every country/region around Asia-Pac. These are relatively closed societies.

I wrote this long post to add to the one above it just so younger types who are interested in Asia can go in with more open eyes and the potential limitations and challenges of a career in Asia in a number of fields in this business.

I hope this helps.

Good Luck

On the point of foreign-born professionals doing well in the US, I would be willing to wager that if they are in a more soft-skills driven field such as IBD/PE (vs. quant funds/HFT), then they are most likely coming from another "Western" country or at least closer in roots (Turkey being a sufficient example). Value systems, proficiency of English, and proximity to Europe, are all inherent advantages vs. a South Korean. Not to mention, looks are also closer. But overall, the sheer volume and density of foreign talent that flock to the US is also alone enough to explain why there are more "foreign-born" success stories. The US market is one of the most attractive for talented professionals globally, the prospect of living and staying in the US is in itself highly attractive in addition to the developed financial industry and deep job market. You just don't see as much top top tier American/European talent going to Asia, and most of these people that do end up in Asia are there due to interest/personal reasons rather than their hope to live a better life. Quite different I would say.

On your point of societies, I do have to agree with you. Asian societies are inherently more homogeneous and have a tendency to far more likely trust what is familiar. Though I would argue this can be seen just as often in European coverage jobs such as German private equity coverage. Are you really going to send a Russian to do negotiate and execute a German family's private equity buyout? The US is unique in that 1) it is the most developed financial market by far, 2) it has a recent history of being one of the most accepting countries/markets in the world and as closest to a melting pot of cultures/nationalities across all the major financial markets in the world.

In terms of talent, I can see where you are coming from, but do have to add that how you define the training needed for execution, sector expertise, etc. is very dependent on market. Buyout, technical focused, granular analysis, in-depth due diligence was an absolute overkill for the type of deals that was prevalent at the early onset of PE in Asia. Not just in terms of potential fees that would have been incurred, but also attention devoted to, applying a buyout-focused skillset and lens to evaluate the VC/Growth equity deals that were most common in Asia was equivalent to killing a fly with a hammer. It just wasn't needed, and wasn't so much that the talent in the Asian market was incapable of doing deals and producing work of the same quality. The buyout market simply didn't exist in Asia, as everything was growing high double digits or above annually. This isn't the growth equity type of investing we are talking about in North America (GA, TCV, BXG, WP), but industrial component manufacturers that were experiencing explosive growth. The skills needed at this time were sourcing, deal negotiation, dealing with "wild west" high ego first generation entrepreneur founders, packaging the deal the right way, and making sure you're betting about in the right direction. I would argue the skillsets needed for deals nowadays in SEA and China are pretty high in terms of caliber, with the mixture of buyout, tech growth equity, and in some other markets corporate carveouts (Japan and Korea), and can personally attest to that.

On your point of returns, I agree for the most part. But the market's growth speaks for itself. Investors' demand for the Asia PE product have only been growing (KKR's $10bn first clost, Hillhouse's $10bn PE fund, Carlyle's $6.5bn+ Asia PE fund). There is a clear demand from a portfolio construction standpoint for exposure to Asia. DPI, IRR, MoM, are a function of the various market conditions across the various geographies, so that's a topic for another day.

And finally, I would have to disagree with your point on where someone should start out at. The thought that you should start their careers where they are "better trained", namely New York/US, is no longer the clear cut answer. Its more complex than that now. In fact, I would argue for more specialized markets, where "local deal experience" is valued above NY deal experience, it is crucial to get that exposure before looking for a PE job in Asia IF your long term goal is to be in that market. Otherwise, yes, NY does provide the most optionality if you want to consider switching markets globally (not just Asia). I cannot see why a China MF team will hire a JPM TMT NY Analyst, who while speaks mandarin fluently, has not done any China deals vs. the MS M&A HK Analyst who has closed 3 China M&A deals in the past 2 years. There are obvious exceptions and complexities (different firm preferences, PE strategies, language requirements, years of experiences), but after my time in Asia, I can confidently say that there are times where I can absolutely see the HK IBD Analyst absolutely crushing the NY IBD Analyst for PE roles where its not just about doing the most complex deal possible (holding language constant). For people that are looking to Asia as a long-term career, they need to consider multiple factors rather than just relying on the old notion that NY is where "better trained people are." Sometimes, those abilities picked up in NY just do not apply to Asia, and thats not to say these deals in Asia aren't complex either. Just a matter of different skillset needs and deal/market environment.

Agree for the most part. As a mainlander, one thing I'd like to add is that I don't believe Hongkongers and Taiwanese people are disadvantaged when it comes to working in finance in HK or Greater China in general.

First, they have no restrictions to stay and work in mainland. Legally, PRC treats them as citizens. Second, there are a ton of high execs at large Chinese corporations who are from HK and Taiwan as Hongkongers and Taiwanese people were the first groups of people to invest in China when PRC opened up its market decades ago. Even to date, lots of investment firms in China/HK are backed by Taiwanese and HK capital.

From a cultural perspective, Non-PRC Chinese can still blend in if they don't talk about politics all day openly to their superiors and colleagues. Language-wise, they do have an accent but who doesn't? So it doesn't really matter.

But I agree with you it is truly difficult for non-asians to break in high finance in Greater China including HK. You can think of it this way. Breaking into high finance in Asia as non-asians is just as difficult for East Asians to break in finance in India or Latin America. Should be no complaints.

One shot one kill. If you don't score high on the gao-kao your life is over. I mean it. No hyperbole. You are just boned, and your professional life is over as of high school senior year. A re-test is possible, but you have to wait a full year to do so. Otherwise no second chances in China.

Your hukou (right of residence in a city) matters a lot too. It's a sort of affirmative-action for locals. The top universities are pretty much all in Shanghai and Beijing. Each university in SH and BJ has a certain % of seats for local hukou residence. So whereas you could be a top 5-10% student in SH or BJ and still get into a top school you would need to be top 2% student in your provincial non-SH/BJ school to get a seat in a SH/BJ school. This what makes social mobility in China so difficult. If you live in SH or BJ you automatically have access to better schools and a better chance at decent employment. If you had the bad luck to be born in China but outside of SH and BJ you're boned.

This also means you MUST score high on the gao kao annual examination, AND ideally be from SH or BJ itself. That's why so many Chinese students go overseas to study. Their parents have means (or borrow) and they want their kids to have a shot at employment. America has no idea what cut-throat is. China's a bloodbath.

Oh, are you a sub-10% test taker in a SH-BJ school? Fuck you, go to a poor uni and crap job. Did you grow up outside of SH / BJ and test well but not super-well-top-2%? Fuck you, go clean toilets. Oh you tested bad on the one annual exam given on one day? Had a cold or flu? Got nervous? Fuck you, go wait tables forever.
Oh, you don't test well on physics or chemistry? Your math not brilliant? Fuck you, you're a pig farmer. Enjoy.

You ask what happens to those who don't test well? They get BONED. Just raped, beaten and left in the massive tens-of-millions-of-people rubbish heap of human misery. The number of smart and hard-working but under-employed Chinese people are legion. Count your blessings you guys if you were born in the US, because other nations have no mercy.

I agree with you that I'd rather be in the US if I had the choice. What I meant was, where does the talented student from Jakarta or Ulaanbaatar or Mumbai, who can't afford a US education, go if they want to open up more opportunities for themselves in the future? Isn't HK going to remain the top/only choice unless they're entrepreneurial enough to do something back home or in another EM? Even if they decide to leave eventually, I'm assuming for many of these students HK has the same branding value as doing a two year stint in NYC used to have for mainland candidates before they went back home. And even if they want to make it out to the US one day, which is so hard nowadays for internationals, they would still have to go through one of these intermediary countries before having the chance.

Respectfully disgree. I would say that for someone from the US you indeed have seen a lot of how things work in China. However I disagree with the part on education. In my country we have dual-track system in which one is similar to the US (you take a standardized test and then submit applications up to 5~6 schools alongside your extracurriculars, SOP etc.) and another similar to the gaokao (in which you take another standardized test) and then see which school/major you can land into. For the 1st track, rich people can afford to send their kids to volunteer in some rural Asian countries and the well-connected can have their kids listed alongside a research paper (or at lest intern at a lab). For the 2nd track, people are faced with the same decision of whether to do a random degree at maybe only 1 or 2 top-target (mind you , it's only a target within the country and not very competitive in Asia as a whole) or study a hot major at a lesser school.

Oh and people def do retake the exams as well here, though it takes a year as well. Mostly for people who are dead set on becoming a doctor.

Or you can take Korea and Japan, which each have their different quirks. Again, I feel like your take is a bit ethnocentric. Can't comment on the working part too much, but again I think Beida and Tsinghua are just higher ranked than the top schools in my country and even HK's, so there's bound to be some advantage. And there's also the fact that a lot of Hong Kong kids aren't as comfortable with Mandarin (their mother tongue is Cantonese).

To be fair, if you don't speak the language / aren't a local, what are you doing in the Paris / Milan / Frankfurt office? What's your value-add? 99% of the deals there are servicing local companies do local things (listing on the local exchange, acquiring a local competitor, etc.) Sure you have the occasional deal of a foreign PE / conglomerate buying up a domestic player, but even then your most likely role is sellside advisor to the local firm.

Now if you are a Turk in Germany or an Algerian in France the type of discrimination you face in high finance is admittedly very intense. Even if you grew up in the country and speak the language flawlessly you will be denied opportunities just based off your looks + racial stereotyping - something much less likely to happen in London / NY.

Exactly! The pool for HK is like all the US TARGET UG/Master+ all the UK TARGET UG/Master (we can try to ignore continental Europe target school for London office)+ HK top3 UG/Master + Mainland UG/Master (even if we just include Top2 in BJ & Top2 in SH as Target) =tons of talents every year globally On the other hand, HK BB/MM probably only has 1/4 or 1/5 headcount comparing to US and 1/2 headcount comparing to London And don't forget another fact: plenty of juniors based in the US originally relocate to HK every year because they are not lucky enough to get H1B

Having worked on the sell-side (non-IBD) FO in a non-HK (East Asian location), I feel that there are more Westerners in high upper management than you would see of Asian counterparts in the US. They maybe have some sort of grasp of the culture in Asia but definitely not the language (definitely not to the same degree of English of Asian kids who grew up in Asia but working in the US). Of course this also has to do with the fact that a lot of the funds investing are hiring Westerners in the first place.

Not saying that it's impossible to overcome and wouldn't attribute the lack of Asians in the upper echelons 100% to racism, but there are indeed subtle social cues that is harder to pick up that works both ways.