Corporations are rushing to issue more debt amid the Federal Reserve’s messaging that it may move quicker to tighten the spigot on its easy money policies.
Despite the emergence of the Omicron variant, Fed Chairman Jerome Powell and a chorus of other Fed officials recently signaled they were likely to support a faster wind-down in the Fed’s asset purchase program.
If the Fed can fully end the so-called quantitative easing program early next year, the central bank would have the flexibility to start raising interest rates earlier than the timeline previously set in early November.
The prospects of earlier — and perhaps more aggressive — interest rate hikes are pushing companies to pull forward issuance of corporate bonds. Lower Fed rates generally correspond to cheaper borrowing costs. And messaging that the Fed may move faster appears to have spooked issuers into pulling forward bond issuance ahead of any rate hikes.
BofA Securities noted that the supply of investment-grade corporate debt jumped to $57 billion in the week ended Nov. 15, as chatter over an accelerated taper began building.
“For companies thinking about their own situation and taking an upper hand knowing interest rates are low now, spreads are tight now, and markets are wide open now: go ahead and issue the bonds when you can,” said Tom Graff, head of fixed income at Brown Advisory.
Warning signs have flashed in credit markets as early as October. In that month, BofA Securities observed a slowdown in inflows into U.S. investment-grade funds and ETFs, coinciding with a 10-year U.S. Treasury yield that was trending higher.
Emily Roland, co-chief investment strategist at John Hancock Investment Management, said adding some high-yield bonds might be an attractive opportunity. But she said to stay away from junkier bonds at the bottom of the rating spectrum.
“It’s going to be hard to sort of squeeze more out of the lower rungs of the high-yield bond market and we would really think about those BBs, those fallen angels that continue to have the ability to be upgraded as this economic cycle unfolds,” Roland told Yahoo Finance Tuesday.
Still, uncertainty looms over the asset class.
Corporate bond spreads widened in November amid heavy supply and lower demand, sparking concerns that more volatility in spreads could be coming in 2022. But investment-grade spreads still remain historically low (104 basis points now, comparable to pre-pandemic levels).
BofA Securities pointed out that the emergence of Omicron shook equity markets but made little waves in spreads, reinforcing their analysts’ views that the “number 1 risk” for spreads remains “a more hawkish Fed.”
Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.
Read the latest financial and business news from Yahoo Finance
Though job growth didn’t improve as much as economists would’ve liked in November, it’s still hard to make the case for another direct payment.
It’s been many months since stimulus checks have hit Americans’ bank accounts, as the last round to go out was approved back in March. And that’s something a lot of people aren’t happy about.
With inflation driving the cost of everyday goods and services up, many Americans are desperate for a windfall. This especially holds true for those earning minimal wages at their jobs, or whose finances have yet to recover from the early impact of the pandemic.
But while inflation may be causing a financial crunch for a lot of people, that alone is unlikely to be a driver of stimulus aid. A bigger measure is the extent to which jobs are or aren’t available. And in that regard, those wanting another stimulus check don’t have much of a leg to stand on at this point.
Joblessness has reached a pandemic low
In November, the national unemployment rate fell to 4.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, down from 4.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} a month earlier. That’s the lowest level of unemployment on record since March of 2020, when the pandemic first hit U.S. soil.
Now despite plunging jobless rates, there was some disappointing news for the economy in November. Nonfarm jobs only increased by 210,000. That’s well below the 573,000 new jobs economists were expecting, and it’s way shy of the 546,000 new jobs that were added to the economy the previous month.
But still, even with job growth coming in at disappointing levels in November, it’s difficult to make the case for additional stimulus aid. Not only are jobs available in today’s economy, but many industries are actually grappling with labor shortages. And to address them, they’re throwing higher wages and other benefits at potential candidates in an effort to get them to sign on board.
Making up for a lack of aid
While the unemployment picture has improved since the start of the pandemic, many individual households may still be struggling to find their financial footing. Those who are still having a difficult time making ends meet may want to consider boosting their income with a second job, what with work being more available and employers being desperate enough to agree to more flexibility. Unfortunately, the age-old advice of “cut back on spending” doesn’t really work in today’s environment, what with the cost of basics having risen so drastically over the past few months.
Meanwhile, the supply chain issues that have led to rampant inflation aren’t about to resolve themselves anytime soon. In fact, things could get worse before they get better, especially with the emergence of the recently reported omicron variant of COVID-19.
President Biden has made it clear that he doesn’t want to resort to the lockdown measures that were implemented early on in the pandemic. But if things do worsen in that regard, and in terms of our economic recovery, then a follow-up stimulus check may be back on the table at some point. Right now, though, that’s not a windfall Americans should be banking on.
A week of volatile swings on Wall Street ended Friday with more losses for stocks, as a mixed batch of U.S. job market data triggered another bout of dizzying trading.
The S&P 500 closed 0.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} lower after erasing a 0.7{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} gain in the early going. The benchmark index was coming off a jolting stretch where it swerved by at least 1.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in five straight days, pounded by uncertainty about how badly the newest coronavirus variant will hit the economy and about when the Federal Reserve will halt its immense support for financial markets.
The Dow Jones Industrial Average slipped 0.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and the Nasdaq composite lost 1.9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. The Russell 2000 index of company stocks slumped 2.1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. All the indexes also posted a weekly loss.
Treasury yields fell, rose and then fell again as investors struggled to square what the jobs report means the Federal Reserve will do on interest rates. The erratic movements fit right in with a week where the S&P 500 swung from a 1.9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} gain to a 1.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} loss in one day.
Political Cartoons
“We got some mixed messages on the data” from the jobs report, “and that can make for some messy markets,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments.
The report, which is usually the most anticipated economic data by Wall Street each month, showed employers added only 210,000 jobs last month. It was a disappointing result when economists were expecting much stronger hiring of 530,000, and it raised worries the economy may stagnate while inflation remains high. That’s a worse-case scenario called “stagflation” by economists, and the omicron variant’s arrival makes its likelihood more uncertain.
But other areas of the jobs report showed better strength. More people are coming back to the workforce, and the unemployment rate improved to 4.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} from 4.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.
Those encouraging numbers helped Treasury yields briefly climb during the morning. But they also came from a section of the jobs report that usually takes a back seat in investors’ eyes to the jobs-growth figure. That’s because they come from different surveys, one of employers and the other of households, and many investors see the job-growth numbers as the more reliable ones historically.
“Today’s non-farm payroll report looks messy to me,” said Jamie Cox, managing partner for Harris Financial Group. “Best to wait for the revisions next month before sounding the stagflation alarm too loudly.”
Some investors said the jobs report could ultimately push the Fed to get more aggressive about raising short-term interest rates off their record low. Others, though, said they expected the mixed report to have no effect, and the wide differences in opinion helped lead to the day’s sharp swings in the market.
What the Fed decides is a huge deal for stocks because low interest rates have been one of the main reasons the S&P 500 has roughly doubled since the early days of the pandemic. Low rates encourage borrowers to spend more and investors to pay higher prices for stocks.
The Fed has already begun slowing, or tapering, its program to buy billions of dollars of bonds each month to support the economy and markets. Chair Jerome Powell jolted markets earlier this week when he said the Fed could wrap up its bond-buying program months before the June target it had been on pace for. That would open the door for the Fed to make the more impactful decision of raising short-term rates.
“With the headlines on omicron and then figuring out if a faster taper also means a sooner hike — and investors worrying if the Fed is going to make a mistake — it’s to be expected we’re going to see some of this volatility,” said Allspring Global Investments’ Jacobsen.
Consider the yield on the two-year Treasury, which is heavily influenced by investors’ expectations for upcoming Fed actions. It fell, then recovered briefly, only to slide to 0.59{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. That’s down from 0.63{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} late Thursday.
The 10-year Treasury yield, which moves more on investors’ expectations for upcoming economic growth and inflation, was likewise unsteady. It zig-zagged immediately after the jobs report’s release and fell to 1.36{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} by late afternoon, down from 1.44{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} Thursday evening.
About 60{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of the stocks in the S&P 500 fell, with some of Wall Street’s biggest recent stars offering the heaviest weights.
Microsoft fell 2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, Nvidia slid 4.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and Tesla dropped 6.4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. They were part of a turnaround for high-growth companies that earlier had led the market on expectations they could keep growing even if the economy was slow.
Energy futures mostly fell. The price of U.S. crude oil slid 0.4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. Energy stocks fell broadly. Exxon Mobil dropped 0.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.
All told, the S&P 500 fell 38.67 points to 4,538.43. The Dow dropped 59.71 points to 34,580.08. The blue chip index pinballed between a gain of 161 points to a loss of 375. The Nasdaq fell 295.85 points to 15,085.47, while the Russell 2000 gave up 47.02 points to 2,159.31.
Chinese ride-hailing service Didi Global Inc. said Friday it will pull out of the New York Stock Exchange and shift its listing to Hong Kong as the ruling Communist Party tightens control over tech industries.
The Securities and Exchange Commission has moved to require that U.S.-listed foreign stocks like Didi’s disclose their ownership structures and audit reports, which could lead to some of them being delisted.
Markets around the world have swung through the week as investors struggle to handicap how much damage the newest coronavirus variant will ultimately do to the economy.
With few concrete answers about omicron, investors have been groping and sending markets back and forth as minor clues dribble out. Still to be determined are whether current vaccines are effective against the variant, whether people will be scared away from businesses because of it and whether already high inflation will worsen due to it.
AP Business Writer Elaine Kurtenbach contributed.
Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Despite developing COVID-19 strain stress, inflation woes and the hesitation that many Americans have to ring in yet another new year that doesn’t seem so new, people are planning to spend more this holiday season. A wealth of surveys suggest that consumers are feeling more comfortable shopping in stores and are leveraging their online purchasing power after the wash that was the 2020 holiday season.
In fact, the National Retail Federation is predicting that, as jingle bells swing and jingle bells ring, Americans will spend up to $859 billion this year—the highest holiday retail sales on record. The average American, according to the research, will spend a cool K on the holidays. Similarly, Mass Mutual projects that Americans expect to spend an average of $1,243 on holiday purchases. The survey finds that 42 percent expect to spend at least $500 more than they did last year throughout the holidays, and 25 percent expect to spend at least $1,000 more.
However, not everyone is so quick to jump on the spending sleigh. A Deloitte survey finds that 11.5 percent of people are planning to sit out the season without spending anything on gifts. Those who do plan on going out dancin’ and prancin’ around retail stores are likely bigger earners. High-income households (raking in at least six figures) will spend five-times that of lower-income households (making less than $50,000) this holiday season. They’ll spend an average of $2,624 each over the holidays, which accounts for a 15 percent increase from 2020 and compares to the $536 that each lower-income household will spend, marking a 22{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} decline from last year.
After all, according to a NerdWallet report, one in three shoppers still have holiday debt incurred last year hanging over their heads. And a LendingTree survey purports that 41 percent of people anticipate going into debt this season, too.
Wherever you fall on the spending spectrum, debt doesn’t do you well. Follow these personal finance tips for holiday shopping to make jingle bell time a swell time without spilling all your eggnog.
And don’t forget to check out Q.ai’s Limited Edition Holiday Shopping Kit, which helps you tap into the holiday shopping frenzy in a less conventional way. The Kit considers where everyone else is spending their money, and then allows you to invest in the major retailers that are crushing it this season—so you can get a piece of the pie, err, ginger bread.
1. Build a budget that’ll keep you and your wallet merry.
Holiday shopping without a budget is like going grocery shopping on an empty stomach—but with even more glittering garnish to attract your attention. It’s important to make a budget of how much you can feasibly spend this holiday season without breaking the bank—and to make that budget before you hit the stores.
2. Make a list, and check it twice.
Make a list of the people for whom you’re shopping, and even include yourself if you know that you’re someone who tends to treat yourself along the way. Consider those to whom you really need to give gifts (perhaps people like your family and your favorite boss) and the people who you’d ideally love to celebrate should you have any budget leftover (like your neighbor down the road).
Once you prioritize these people, give some serious thought as to what exactly you plan to purchase for them. Having a list of what you need to snag from the stores will help hold you accountable and not spend extra dollars (that add up) on that shiny ornament or adorable stocking stuffer you didn’t need. It’ll also help you save money if, for example, you can buy some stuff in bulk—like two-for-the-price-of-one candles for your colleagues.
3. Ask Santa for better prices.
Once you know what you want to buy, don’t be so quick to do it. Shop around for the best prices. Some shops offer holiday sales or coupons you could collect to shave dollars off the price tag.
While physically going into all the dizzying stores crawling with shoppers can be daunting, you could shop online or call stores ahead of time to see what they have in stock—and for what cost to you.
4. Take advantage of all the holiday miracles.
Look out for little ways to save money here and there, like through shopping cart abandonment. This is an e-commerce term that refers to placing items in your online cart, but not completing the checkout process. Some retails may email you coupons to commit to checking out if they see that you’re sitting on some stuff.
Also keep an eye out for discount codes that are floating around your social media, which will certainly serve you ads tailored to your online shopping history.
5. Keep your receipts at the ready.
At the end of the day, be sure to hang onto your receipts and collect gift receipts when necessary. The last thing you want to do is waste money on gifts that don’t fit or function properly, which would be a bummer for both the recipient and your wallet.
Keeping your receipts can also help you track your expenses and stay on track of your holiday budget.
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Monday, December 6, 2021
Most investors will enter this week confused after battling through another topsy-turvy trading week.
Bitcoin nosedived at its worst by 20{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} over the weekend (more on that below). Last week, the S&P 500 saw five straight losses of at least 1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} at one point each day, according to Bloomberg data. Small-cap stocks as measured by the Russell 2000 are officially in a correction.
Does one brave these rockier waters and buy the dip? After all, the strategy has worked wonders in the past five years as markets have been awash in liquidity. What I say is to sit tight. Honestly, you shouldn’t be confused at all given the economic implications of the new Omicron variant (and potentially others) and the Federal Reserve soon pulling back the liquidity punch bowl.
I think the team at Goldman Sachs led by Jan Hatzius nicely summed up this weekend why you should be hesitant to buy dips in the market in the near-term. In other words, the market has been right to hate the Omicron variant:
“First, Omicron could slow economic reopening, but we expect only a modest drag on service spending because domestic virus-control policy and economic activity have become significantly less sensitive to virus spread.
Second, Omicron could exacerbate goods supply shortages if virus spread in other countries necessitates tight restrictions. This was a major problem during the Delta wave, but increases in vaccination rates in foreign trade partners since then should limit the scope for severe supply disruptions.
Third, Omicron could delay the timeline for some people feeling comfortable returning to work and cause worker shortages to linger somewhat longer.”
The read here: the market probably hasn’t priced in anything Hatzius discusses above from an economic standpoint. It’s currently in the process of figuring things out. Hatzius slashed his first quarter 2022 GDP estimate to 3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} from 4.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} primarily due to the spreading Omicron variant.
Then the other component at play is in fact the new Jerome Powell-led Fed in 2022, one that is more focused on controlling inflation than providing support to asset markets. To that end, Bank of America’s Chief Investment Strategist Michael Hartnett sets the stage very well for 2022 in this new Fed era:
“2021-22 investment backdrop we say similar to early stagflation of late-60s, early70s … period of inflation & interest rates breaking higher from secular low/stable trading ranges on back of high budget deficits, Vietnam, “Great Society” policies, civil unrest, political and acquiescent Fed; late-60s/70s “stagflation” winners were real assets, real estate, commodities, volatility, cash, emerging markets, all of which held their own versus inflation; losers were bonds, credit, equities, tech, all of which ultimately struggled; we think we’re in the ’69-’71 period.”
Harnett is bearish on 2022, and expects a “rates shock” and tightening financial conditions.
Happy trading! And remember, what goes up must eventually come down.
Odds and ends
Cryptocurrency: Yahoo Finance Editor-in-chief Andy Serwer and crypto reporter David Hollerith did expert jobs this weekend covering the rout in bitcoin prices (down 20{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} at one point on Saturday). So I won’t spend a lot of time on it, other than to say exuberant crypto asset prices are about to be put to the test as the Fed moves off peak liquidity. Those asset prices could also be put to the test this week as the CEOs of six major crypto companies testify at a Dec. 8 hearing of the House Financial Services Committee titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States.” I am very interested to see if execs from Paxos, FTX, Coinbase, Circle, Stellar Development Foundation and Bitfury tell the likes of Congresswoman Maxine Waters that they want more regulation. Now is the group’s chance to send along that message, which is one I have been hearing from crypto people for over a year. I’ll reiterate: Be careful what you wish for, crytoverse.
Stock market bubble: Berkshire Hathaway’s Charlie Munger’s comments last week on valuations being crazy just like the 2000 dot-com bubble were well taken. I don’t agree 100{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} with the billionaire’s hot take, but it doesn’t take a rocket scientist to see pockets of excess in all sorts of markets at the moment (even in a market off its mid-November record highs). But to push back on Munger’s musings, look no further than this year’s IPO market. Bank of America strategist Jill-Carey Hall points out the number of traditional (non-SPAC) deals year-to-date is tracking the highest since the aforementioned tech bubble of 2000. BUT, as a percentage of market cap, deal value is half of 1999 levels. Sure doesn’t look bubblelicious to me, but then again what do I know, Munger’s net worth is 4,000 times mine (a rough guess).
DocuSign:Friday was a session for DocuSign that falls under the category for me of “wow, I haven’t seen that in a while.” Shares crashed 42{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} by the close of trading as the company is experiencing slowing growth that took execs by surprise. Hat tip to DocuSign CEO Dan Springer for even coming on Yahoo Finance Live to talk with me and Zack Guzman, while the company’s stock plunged 40{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. Having said that, watch DocuSign for a short-term dead cat bounce this week — Springer told us he is buying $5 million in company stock on Tuesday because the market reaction looks very overdone. I suspect he won’t be alone in trying to pick the bottom.
Small-cap stocks: Few sectors have been harder hit during this two week or so sell-off than small caps, or those of companies with outsized exposure to the U.S. economy. The small-cap Russell 2000 has tanked 12{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} from its recent high on Nov. 8, per Yahoo Finance Plus data. Yahoo Finance’s markets wizard Jared Blikre notes on Twitter the iShares Russell 2000 ETF is now at “old” support levels on the charts. The selling pressure may not yet be over, small-cap experts contend.
“Given the uncertainty around the new variant and the economy, it is hard to see investors wanting to add risk heading into year-end,” says Steven DeSanctis, Jefferies’ small and mid-cap strategist (known on Wall Street as the “SMID” strategist). “When these issues are resolved, and we think that will be sooner rather than later, we see small spiking higher, like it has done numerous times since the low in March 2020. We would not be surprised to see a real January Effect with small leaping higher, beating large, and the cyclicals leading the way,”
Have no clue what the January Effect is? Give this a quick read from our friends at Investopedia.
HONG KONG, Dec. 6, 2021 /PRNewswire/ — The job market in Hong Kong is being driven by a combination of rising confidence in the market, shifts in the talent demand and rapid development of technologies post-pandemic, according to the digital Salary Survey 2022 by Robert Walters and Walters People, the world-leading specialist professional recruiter brands under the Robert Walters Group. Key findings[1] show that nearly 90{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of employers in Hong Kong are concerned about employee retention when market conditions improve, while 85{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of them also concern the shortage in talent and skills, in particular within senior and team leader levels.
Logo
Hong Kong overview
Overall, Hong Kong market rebounded strongly in 2021. There was a good deal of pent-up demand to start the year and hires that would possibly have been made in 2020 under normal conditions were executed in early 2021, leading to a glut of hiring. Talent pool has started to become limited in all areas especially within the technology and financial services sectors due to demand for digitalisation, travel restrictions and higher level of emigration.
Findings also show that candidates consider factors beyond compensation and benefits when looking for jobs, such as if companies offer good work-life balance, access to latest technology, hybrid working and if the company’s positions on social and political matters align with their own etc.
Digitalisation and transformation will continue to be a key growth area across many sectors
Companies are becoming more agile with their workforce post-COVID and are speeding up their transformation projects. Findings show that 95{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of tech professionals are confident about job opportunities. It is anticipated that the hottest technical skills in 2022 will be big data analysis, machine learning, AI and cyber security across both permanent and contract roles. For job movers possessing in-demand or niche skill sets, salary increments of 15-20{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} would be expected, and could be as high as 40{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for some senior positions.
Demand for hybrid jobs has intensified in the commerce sectors
Across HR, marketing and finance functions there is an increase in hybrid jobs where more and more jobs are combining skill sets that traditionally do not fall under the same roles, or candidates in technical disciplines are expected to apply more soft skills such as analysis and management skills in their jobs. For example, companies will be seeking for finance candidates that are highly analytical with strong commercial mindset who can analyse big data and convert this into commercial results. This shift in demand for talent has created challenges to hiring managers as the broader the job requirements and more specialised the role are, the harder it will be to attract the best talent that are often experienced candidates.
The financial services candidate pool is shrinkingwith higher demand for ESG-related skills
Travel restrictions and higher level of emigration mean that financial services professionals who stay may be able to command higher salary increments when they move jobs. With very little hiring of expatriates and many existing ones emigrating from Hong Kong, the percentage of foreign nationals working in the Hong Kong financial services sector especially front office pool will shrink further. The sector has performed strongly and firms are anxious to avoid turnover and focus on retention. Salaries are expected to increase in 2022 with the standard pay rise level of 4-5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} reaching 10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. For job movers the previous standard increment of 15{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} is now closer to 20{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, although it can vary somewhat depending on the individual context.
On the other hand, with Environmental, Social & Governance (ESG) edging into finance’s mainstream, it is expected that ESG factors are increasingly taking centre stage within investment strategies by corporates and financial services in 2022 and beyond. However, supply of professionals that possess sustainability-related skills are limited in Hong Kong so the competition will be fierce.
Companies are advised to capitalise on the opportunities brought by the new normal
The pandemic has forced companies and workforces to scramble towards hybrid working and the experience has shaped the perspectives of work. Industry survey[2] conducted by Robert Walters reveals 78{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of professionals said that the offer of hybrid working arrangements would make them more likely to join a prospective employer.
Ricky Mui, Managing Director – Greater China of Robert Walters Group says, “Given the shortage of candidates and the increasing demand for hybrid jobs, it’s expected that the competition for the best candidates will be fierce in 2022. Candidate experience will be key in attracting talent and businesses embracing hybrid workplace effectively will be recognised as an employer of choice. At the same time, having a robust equity, diversity and inclusion (ED&I) policy, as well as adopting new strategies to broaden the talent pool will ensure companies gain an edge over their competitors. “
Steady growth in contract roles for key projects drives demand for tech professionals and junior staff
Market rebound has also driven companies to catch up with projects that were on hold during COVID. During busy periods with an increased workload, contract professionals that can alleviate a short-term skills or resource gap will be particularly valuable to hiring managers where the recruitment process is more drawn out due to a narrow talent pool with few suitable candidates. Distinct recovery especially within the junior permanent recruitment market is also expected across technology and business transformation project roles.
Carly Adams, Director of Walters People Hong Kong, says, “Hiring managers need to be prepared to run an efficient and timely recruitment process in junior roles and contract recruitment. Time delays between interview rounds or non-essential interview participants will very often mean that they will miss out on their preferred candidate in a market such as this.”
[1] Statistics are based on industry research conducted by Robert Walters and Walters People in Hong Kong during the period of September to October 2021.
[2] Source: “Symptoms of dysfunction in hybrid working – Obstacles & Solutions” published by Robert Walters in August 2021
About Robert Walters – Established in 1985, Robert Walters is one of the world’s leading specialist professional recruitment consultancies spanning 31 markets. The Hong Kong office specialises in placing candidates on a permanent basis in the following specialities: accounting & finance, engineering & property, financial services, human resources, legal & compliance, sales & marketing, supply chain, logistics & procurement, and tech & transformation.
About Walters People – Walters People is part of the Robert Walters Group and operates in six European countries and in Hong Kong. The brand specialises in placing junior candidates and contract candidates across a range of professional disciplines including accounting & finance, business support, constructions & engineering, financial services, human resources, sales & marketing, supply chain, tech & transformation.
About the Robert Walters and Walters People Salary Survey –
Around the globe, employers and professionals alike have been relying on the Robert Walters and Walters People Salary Survey to help them make critical decisions for their businesses and careers. The digital edition of the Salary Survey is a comprehensive guide to salaries for thousands of roles in 31 locations, and it is packed with helpful tools and resources for hiring managers and job seekers alike, including the latest trends and analysis for different industries, as well as video updates on market conditions from industry experts.
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