Hong Kong’s banks and stockbrokers are hiring more financiers from mainland China to use their Mandarin-speaking skills to pitch for initial public offers (IPOs) and other deals, as the city’s stock benchmark hovers at a 20-month high amid record inflow of capital from China.
Mainlanders take up about 60 per cent of all investment banking jobs in Hong Kong, up 10 percentage points from 2015, and their share may widen to between 65 per cent and 70 per cent over the next four years, said John Mullally, regional director at the executive search firm Robert Walters, citing data and conversations with clients.
“Investment banks actually care less about where candidates come from than their demand for native Mandarin speakers familiar with the [corporate] culture in mainland China,” said Jerry Chang, managing director at the recruiting firm Barons & Co.
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The changing demographics in Asia’s second-largest capital market has spillover socioeconomic implications in a city grappling with record unemployment and its worst recession in decades, while nerves remain raw from the anti-government protests of 2019 and resentment against mainlanders bubble under the surface. Still, the trend reflects Hong Kong’s reliance on mainland capital – and talent – to remain relevant as China’s offshore financial centre.
China-domiciled companies like Nongfu Spring made up 98 per cent of the US$50.83 billion raised last year through IPOs in Hong Kong, up from the 73 per cent in 2019 and 94 per cent in 2018, according to Refinitiv’s data. A decade ago, Chinese companies made up 51 per cent of new capital raised in Hong Kong.
Chinese banks led by China International Capital Corp (CICC), China Merchants Bank and Citic Securities have increased their share of Hong Kong’s deals, making up seven of last year’s top 10 IPO bookrunners. In 2015, five of the top 10 were Chinese banks, while CICC was the sole Chinese bank in the top as recently as 2010.
Here are 10 of the most influential financiers in Hong Kong who hail from the mainland, based on Refinitiv’s 2020 ranking of equity capital market (ECM) deals:
Wang Sheng, China International Capital Corporation (CICC)
Wang, 43, heads the investment banking department of China’s largest investment bank CICC, which topped Refinitiv’s 2019 and 2020 ranking as the top IPO bookrunner in Hong Kong. He joined CICC in 2002 with a master’s degree in economics from Tsinghua University and worked his way up the ranks to managing director.
“Hong Kong’s stock market has become the preferred IPO venue by unicorns,” Wang said during a conference in November in Sanya. His 2019 salary was 17 million yuan (US$2.6 million), according to CICC’s filing. Wang and CICC declined to comment.
Wei Sun-Christianson, Morgan Stanley
Sun-Christianson, 64, is the Asia-Pacific co-chief executive officer and CEO of China at Morgan Stanley, positions she held since 2011. The bank was the top arranger in 2020 of fundraising across all equity capital market deals in Hong Kong, helping Xiaomi raise US$4 billion through a combined sale of convertible bonds and additional shares, in Hong Kong’s biggest top-up funding after an IPO.
Growing up in Beijing, Sun studied at the Columbia Law School before practising in New York. She moved to Hong Kong in 1990 to join the Securities and Futures Commission (SFC) to develop the regulatory framework for mainland companies to list in Hong Kong as H-shares.
She joined Morgan Stanley in 1998 and advised on landmark IPOs for China Life, Sinopec, and Semiconductor Manufacturing International Corporation (SMIC). After brief stints at Credit Suisse and Citigroup from 2002 to 2006, she returned to Morgan Stanley in 2006 where she rose to become one of the highest-ranking women bankers in Asia. She is a director on the board of Estee Lauder.
Yang Fan, UBS
Yang joined UBS last April as the Asia chairwoman for global banking at the Swiss bank. UBS was ranked seventh in Hong Kong’s IPO league table last year, after a 12-month ban on underwriting stock sales after being slapped with a fine by the SFC.
At China Merchants Securities International since 2013 before joining UBS, Yang helped transform the retail brokerage into a full-service investment bank. The bank, the overseas unit of China Merchants Securities was among the top five in IPO underwriting by value from 2016 to 2018. The bank rose to second place after helping Yum China to arrange for its US$2 billion stock sale, as well as a US$1.6 billion secondary listing by data centre provider GDS Holdings.
Li Tong, Bank of China International (BOCI)
Li is the first woman to take the helm of the brokerage of China’s oldest bank, taking charge as chief executive in 2012. Born in 1971, Li is the daughter of China’s former propaganda chief and Politburo Standing Committee member Li Changchun.
BOCI was the sole Chinese investment bank to win the 2019 mandate to help Saudi Aramco raise US$25.6 billion, the record holder for the biggest stock sale in global finance. The bank ranked eighth in the amount of IPO proceeds raised last year in Hong Kong.
Mark Wang Yunfeng, HSBC
Wang was promoted last March to president of HSBC’s China business. HSBC was the eighth-biggest bank in follow-up offerings in 2020, falling from third place in 2019.
Born in the Jiangsu provincial capital of Nanjing, Wang worked as a forex and bond trader at Bank of China during the 1980s before joining Deutsche Bank where he was the co-head of Asia between 2004 and 2005. Wang joined HSBC in 2005 to oversee China banking and markets from June 2016. He is considered one of the potential successors to the bank’’s Asia-Pacific chief executive Peter Wong Tung-shun.
Jiang Guorong, Citi
Jiang, 51, is Citi’s China chairman and head of corporate and investment banking. Born in Nanjing, Jiang graduated in economics from his hometown university before getting a master's degree at Miami University, followed by a doctorate in economics at Cornell. His career began at the International Monetary Fund (IMF) as an economist, followed by jobs at the Hong Kong Monetary Authority (HKMA), the Hong Kong office of the Bank for International Settlements (BIS), CICC and UBS before being hired by Citi. He brought several mega deals to list in Hong Kong, including the IPOs by Yum China and NetEase, lifting Citi to fourth place in Hong Kong’s equity capital market deals last year.
Bao Fan, China Renaissance
Bao, 50, is chairman and chief executive of China Renaissance, a Chinese investment bank that helped many start-ups and biotechnology firms raise capital. Born in Shanghai, Bao studied at the Norwegian Business School after obtaining his first degree at Fudan University. He worked at Morgan Stanley and Credit Suisse before venturing out to establish China Renaissance in 2005.
The Beijing-based bank made its name by advising, and investing in, a number of high-profile technology deals, including the mergers between Meituan and Dazhong Dianping, between Didi and Kuaidi to form China’s largest ride-hailing company, as well as Meituan-Dianping’s acquisition of the Mobike bicycle-sharing app.
“As China’s new economy grows and household wealth increases, the relevant financial services sector will also grow,” Bao said in a September 2018 interview with South China Morning Post when his bank was listed in Hong Kong. “I think the sector will double in size in five years.”
Charles Li Xiaojia, former HKEX chief executive
Li, a former oil rig worker and journalist before turning to finance, was Hong Kong’s highest paid financial regulator when he held the helm of Asia’s second-largest stock market. He was paid HK$51.1 million (US$6.6 million) in 2019 in total remuneration, according to filings by Hong Kong Exchanges & Clearing Limited (HKEX), which are listed in the city.
Hong Kong is the world’s third-largest capital market, with the city’s total capitalisation rising to HK$46.13 trillion (US$5.95 billion) as of December 24, from the time Li took over in 2010. The city had been the world’s biggest destination for IPOs in seven of the past 11 years.
A resident of Hong Kong for nearly two decades, Li is a fierce defender of the city’s role as China’s window to the global financial markets, offering Hong Kong as the go-to place to help Chinese companies raise international capital in the HKEX’s three-year strategic plan.
The former China chairman of JPMorgan Chase before joining the HKEX, Li created a cross-border investment channel called the Connect to let Chinese investors trade in Hong Kong, and allow global funds to access the Shanghai and Shenzhen exchanges via Hong Kong. Southbound capital into the city has set daily records for 12 successive days so far this year, and CICC foresees as much as 600 billion yuan flowing into Hong Kong in 2021.
“Amid China’s rapid development, some may look at the nation’s growing wealth relative to Hong Kong’s, and the falling proportion of Hong Kong’s contribution to China’s GDP, as indicators that the city’s glory days are numbered,” Li said in his blog in December before stepping down as chief executive. “However, such a conclusion is at odds when you consider Hong Kong’s unique and significant contributions to the development of China’s financial markets, and the strong likelihood that these will be further enhanced in the years ahead.”
Shan Weijian, PAG
Shan, chairman of Hong Kong-based private equity firm Pacific Alliance Group (PAG), is one of the city’s most powerful wheeler-dealers.
In his memoir – with a foreword written by former US Federal Reserve chairwoman and Biden’s Treasury Secretary Janet Yellen – Shan recalled a childhood during China’s Cultural Revolution, where he spent six of his teenage years in the Gobi desert as one of Mao Zedong’s “barefoot doctors,” providing basic health care to troops. Shan returned to Beijing to study English in 1975 a year. When China opened itself to the world in 1978, he became one of the first post-revolution Chinese students to study abroad, earning business degrees from the University of San Francisco and UC Berkeley. His career in finance took him from the World Bank to JPMorgan Chase, and the private equity firms Newbridge Capital and TPG before he founded PAG’s private equity business in 2010, including a six-year stint teaching business at the Wharton School at the University of Pennsylvania.
Early in his career, Shan helped Newbridge privatise state-owned Shenzhen Development Bank, subsequently selling it to Ping An Insurance Group in 2011 to become Ping An Bank. More recently, PAG prevailed in the boardroom tussle for China’s third-largest producer of industrial gas Yingde Gases Group.
Fred Hu Zuliu, founding chairman of Primavera Capital
Hu, who turns 58 in June, studied engineering at Tsinghua before turning to economics at Harvard University where he earned a doctorate. Early in his career, the native of Hunan province worked as an economist and consultant at the International Monetary Fund (IMF) and the World Bank, before joining Goldman Sachs in 1997, where he rose to Greater China Chairman by 2008.
He left Goldman to establish Primavera in 2010. The firm bought out Yum! Brands’ network of KFC, Taco Bell and Pizza Hut outlets in China in 2016, spinning off Yum China in a New York IPO several months later. Yum China raised US$2.23 billion last September in a Hong Kong secondary listing.
Hu was appointed an independent non-executive director of SCMP Group Limited in 2010 before this newspaper’s acquisition by Alibaba Group Holding in December 2015. Hu is a director on the boards of HKEX, UBS and Alibaba’s affiliate Ant Group.
“Hong Kong must overcome division and stalemate and build a healthy relationship with the central government under one country, two systems,” he wrote in a column to the Post. “Only pragmatism and constructive compromise can secure a better future for Hong Kong.”