19 February, 2016
Reading a number of articles in the financial press recently, one could be forgiven for concluding that China is heading for a monumental crash that will, inevitably affect Hong Kong. China equities have been a cause of concern, and, coupled with the weak global commodities market, a number of notable financial pundits have predicted the next global crisis (although, by their nature, pundits are very quick to jump on the bandwagon to stake their claim as the oracle of the next crash).
So, is this cause for alarm in the legal market in Hong Kong? IPO teams were busy last year, with Hong Kong once again taking the world number one spot for listings. Although the beginning of the year has seen some trepidation, the recent Ronshine listing, and the potential IPOs of Postal Savings Bank of China and Union Medical, point towards a potentially strong deal pipeline, with many firms optimistic. A busy IPO market would certainly keep the firms (and the in-house legal teams at the respective underwriters and sponsors) busy, but not necessarily overly profitable, and, in the current climate, with no guarantee of follow-on work. It has been raised by a number of Partners that Hong Kong’s legal market for corporate and capital markets has for some time been close to saturation point, and for some firms, getting a viable return is not likely to get any easier.
Most regulatory teams are expecting to continue to be kept busy (it is difficult to see when this area is likely to quieten down, especially if another crash occurs and it transpires that the regulations were, yet again, ineffective), although most financial institutions will hope they have now passed through the worst of the the headline fines imposed in recent years. Litigation teams are already seeing an upturn in work due to unhappy investors seeking someone to blame for their recent losses – it is amazing how sophisticated investors suddenly transform into naïve retail investors once they lose a few dollars.
The implementation of the Competition Ordinance at the end of last year could prove a fruitful area of work, with a number of firms already marketing themselves as experts in this area, but it is yet to be seen whether or not the Ordinance will be enforced with real teeth, or the more obvious targets investigated. At the moment, firms seem to be getting some steady non-contentious work in this area, although a number of key trade associations in Hong Kong have stated that is is unlikely many of their members will need to change their practices.
Overall, most firms seem bullish about the year ahead, and many are continuing to hire to bolster their teams in the areas outlined above, as well as M&A and general corporate. If this week’s market optimism sparks investor confidence, and if, as some are espousing, the market blip was not related to economic fundamentals, we could see a strong, albeit highly competitive, 2016 for the legal market in Hong Kong.
Written By Ben Cooper
Ben is a Barrister by training and has been providing Executive Search and career consultancy services to the legal profession for over 10 years.
