Date
23 November 2017
AIA Group saw its stock price hit a new high of HK$49.65 on the back of its strong earnings. Many local insurance companies are keen to hire mainland talents to maintain their growth momentum. Photo: Bloomberg
AIA Group saw its stock price hit a new high of HK$49.65 on the back of its strong earnings. Many local insurance companies are keen to hire mainland talents to maintain their growth momentum. Photo: Bloomberg

Financial industry is a game of human resources

In practically all sectors all over the world, competition comes down to competition for talent.

Talent will help lure resources and capital, and allow companies to compete with those with abundant resources. Those who have resources and capital but lack talent can easily become the target of others who want their resources.

Over the years, Hong Kong has assisted Chinese financial institutions and other companies to tap into the global market and has cemented its status as a global financial hub.

The Hong Kong Financial Services Development Council has recently released a report on the development of the city’s human capital in financial services.

The city now faces a talent gap in the financial services sector. As China’s financial sector expands rapidly and ventures into other parts of the world, there will be a huge demand for world-class talent with language skills, professional knowledge and leadership abilities.

Asset and wealth management is a key growth area in the city’s financial sector. Currently, there are more financial institutions with license type 9 (asset management) granted by the Securities and Futures Commission than those with license type 1 (dealing in securities).

The report also noted the shortage of talent in specific areas such as back office in private banks and front office in private banking and insurance. The growth in these sectors has mainly been driven by increasing wealth on the mainland, and the city has to train a large number of professionals to meet the huge market demand.

For example, AIA Group Ltd. (01299.HK) saw its stock price hit a new high of HK$49.65 on the back of its strong earnings. The stock posted an annual return of 30.5 percent, outperforming the benchmark Hang Seng Index and many H-share funds.

Prudential (02378.HK)reported its earnings jumped 64 percent last year, with the annualized premium equivalent in Hong Kong and the mainland up 39 percent and 35 percent respectively. Manulife Financial (00945.HK) also reported its business growth was mainly driven by mainland clients.

Given their robust earnings and bright prospects, many local insurance companies are keen to hire talents from the mainland as front office staff.

These talents are usually well-educated and have a strong drive to succeed. They also speak fluent Mandarin and English, and has a thorough knowledge of mainland culture as well as connections and social network.

These talents usually contribute to substantial asset and wealth management business and revenue growth.

Some academic and financial institutions have arranged short-term training courses for local students or employees on the mainland in recent years. However, these students and employees still have very limited knowledge about the mainland.

In order to build connections, they need to spend months or years of studying, working and making friends on the mainland. As such, these short-term training courses and visits have very limited impact.

In his recent budget speech, Financial Secretary John Tsang Chun-wah promised to earmark HK$1.2 billion for training local talents, and set aside HK$100 million to launch a three-year pilot scheme for insurance and asset and wealth management services.

Under the scheme, government will collaborate with the industry to organize activities and provide internship opportunities to students.

The Singapore Monetary Authority allocated US$15 million in 2009 to assist local college graduates in their one-year internship program in local financial institutions. Their experience and on-the-job training provide will pave the way for their future career path.

Local securities brokerages and investment banking firms will have no substantial talent increase in the next three to five years.

Standard Chartered (02888.HK) has recently shut down its equities division, while many local securities brokerages have offloaded assets to financial groups like Cash Financial Services Group and Sun Hung Kai Financial Service.

Local brokerages lag behind their mainland counterparts due to the high concentration of mainland investment.

This article appeared in the Hong Kong Economic Journal on March 12.

Translation by Julie Zhu

[Chinese version中文版]

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JZ/JP/CG

Founder and Managing Director of Pegasus Fund Managers Ltd.

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