It’s “pretty much mandatory” for Hong Kong ECM bankers to speak Mandarin

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It’s “pretty much mandatory” for Hong Kong ECM bankers to speak Mandarin

Demand for Mandarin speaking equity capital markets (ECM) bankers has risen this year as mainland companies dominate new listings on the Hong Kong exchange.

About US$51.2bn was raised in 2020 from Hong Kong initial public offerings (IPOs) and secondary listings, with 98% of the new stock issued by mainland firms, up 74% year-on-year, according to a recent report by Deloitte China.

“With almost all of the Hong Kong IPOs now by issuers from the PRC, it has become pretty much mandatory – except perhaps at the most senior level – for ECM bankers to be Mandarin speakers with experience of operating in mainland China,” says Philippe Espinasse, a Hong Kong-based consultant and former head of Asia ECM at Nomura.

The ability of ECM bankers to market and win new mandates now takes “significant precedence” over execution skills, and this is not just confined to Hong Kong or Asia, says Espinasse. “ECM bankers are increasingly rewarded for their ability to bring in new mandates, at the expense of their technical and corporate finance skills. In an environment where many issuers have shaky business plans, and where fraud cases pop up in ever spectacular fashion, this can at times be a recipe for disaster,” he adds.

Hong Kong headhunter Eunice Ng, director of Avanza Consulting, says hiring candidates with IPO experience is “competitive”. “This is especially so because they need the ability to work well and communicate well with mainland Chinese teams and clients. Mandarin proficiency, both spoken and written, is critical as it helps to build new connections and maintain long-term relationships,” she says.

Despite the suspension last month of the blockbuster Ant Group IPO, Hong Kong has this year seen a surge of so-called homecoming listings from mainland companies (including tech giant JD.com, gaming firm NetEase, and fast food operator Yum China) that are selling shares in the city to supplement New York listings amid tension between the US and China.

Photo by Donna Elliot on Unsplash

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