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 $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.
SALARY CAPS
The $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.
“The breadth of the compensation caps being implemented will dictate whether intra-industry moves increase or whether key staff leave the fund management industry completely,” Z-Ben said in a report published early September.
The arrest and detention, opens new tab of bankers also represents an increased risk of doing business just as compensation is effectively falling, said a former investment banker who quit his job last year and moved abroad.
Many state bank staff have constraints on travelling abroad, just in case one day the authorities want to launch a probe into certain businesses, the former investment banker said.