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These days, it’s common to hear of young bankers jetting off to work in Asia to grab a piece of the action on the other side of the world.But naturally, as with everything else, there are drawbacks. Euromoney has a decent list of them based on data collected from a Dealogic study on investment banking revenue in Asia.
They say banking is made tougher by the fact that the industry is overly reliant on China, the new local shops that are popping up everywhere, expensive employees, and customers that like to see a ton of bookrunners on a deal.
The number one bummer about doing business in Asia, though, is the fact that it’s so reliant on equities. If the market is rolling, everything’s fine, but when it’s not, everyone is in trouble.
“There isn’t a single person that doesn’t think ECM isn’t the major engine of profitability in investment banks in Asia,” says one of the regions leading hedge funders…Asia — with particularly young and volatile markets, prone to capital flight — is vulnerable when things slow down. Asian ECM revenue in 2008 didn’t even hit $1 billion for the entire street: the $973 million fo fees was a fourfold decline on the previous year.
Think about it this way: 71% of Morgan Stanley’s revenue came from ECM in 2010. It was 64% in 2011. You’ll see numbers like that from banks across the board.