It’s official: Hong Kong's finance professionals are heading towards bonus season more glum than last year, a survey reveals.
In a year that has so far seen Alibaba take the world’s biggest-ever IPO away from the city and the Occupy Central protests make life difficult for banks and businesses, fewer people are expecting a payout.
The survey, conducted by specialist recruitment group eFinancialCareers, shows 78% of respondents in Hong Kong expect a bonus this year compared with 83% last year.
“This year we are potentially seeing more realism in the market,” Neil Clark, director of Asia-Pacific for eFinancialCareers, told FinanceAsia.
“As we move further along in the new compensation era, banks are getting better at managing expectations and that perhaps is filtering down,” he said.
Of course, 78% still represents a sizeable chunk of people. What's more 43% of respondents actually expect to receive a higher bonus this year. But that's compared with the 53% who expected an increase in 2013, so the downward trend is clear.
For the record, 38% expect no change to their bonuses and 18% expect a decrease – you know who you are.
The slight drop in confidence might surprise some observers seeing as investment banking activity in Hong Kong has picked up this year.
Based on data collated by Dealogic, Hong Kong's investment banking revenues so far this year total $530 million compared with $378 million in the same period last year.
Beyond Hong Kong
Survey respondents in Singapore appear more consistent, with 71% expecting a bonus compared with last year’s 72% and 42% expecting an increase. That's despite a slight drop in the Lion City's investment banking revenue to $389 million year-to-date from $407 million in the same period of 2013.
That said, finance professionals in Singapore appear less optimistic in the medium term, with 30% expecting bonuses to decrease in the next three years compared with 19% in Hong Kong.
“For Singapore, two-thirds of respondents work in back-office positions and are therefore further away from profit generation. Maybe they are less confident for that reason,” Clark said.
The survey was conducted in October, polling 334 professionals working in banking and finance in Hong Kong, 696 in Singapore, 978 in the US and 587 in the UK.
US and UK respondents provided perhaps the biggest sign financial markets there are returning to normal after the financial crisis and the redrawing of investment banking regulations.
In the US, 76% of respondents are expecting a bonus, which is still lower than their Hong Kong counterparts but a huge 17 percentage points higher than last year’s US survey.
Furthermore, 60% of US respondents said they were expecting an increased bonus this year and 34% said bonuses would increase over the next three years.
In the UK, 71% are confident of getting a bonus compared with 61% last year, while 56% are expecting an increase.
But beware. If life teaches us anything it is the often stark difference between what should happen and what does happen.
“We have been doing this survey for quite a few years and there is generally a mismatch between expectations and reality,” Clark said.