The equities market is not in the strongest position at the moment. A quick glance at the FTSE index alone reveals little of excitement. Since last June’s worrying dip to below 5,000 we have seen a rise peaking at above 6,000 in April this year, but it has since disappointingly fluctuated below this level.
As the volume in equities is down, global investment banks are sitting tight in the post bonus season with little increase in headcount. Any hiring taking place is for replacement purposes and is being done internally. This is not a permanent strategy, and as equities picks up again in the near future, things will change.
In contrast, European brokerage houses are hiring aggressively. We are seeing an increasing number of houses appreciating the importance of having a strong presence in London. They have higher employee turnover rates than investment banks. Due to their more specialist approach they are always in need of the freshest talent. The interviews we are currently arranging are all for upgrading purposes; finding the best of the best brokerage talent.
It is rare for someone in investment banking sales or trading to move to a brokerage house, though not impossible. It is essential candidates have indispensable relationships with clients. When they move to smaller brokerage houses they won’t have the backing and immediate buy in capability that a top tier investment bank has. Candidates should be well aware of the differences between the two types of organisations before considering a move.
Investment banks will be more active in hiring externally when the market turns. The crucial question is when that will be? Nobody can predict the future with absolute certainty however we may begin to see such a turn by mid 2012. Going by the theory of correlation with fixed income, past trends show us there is reason to suggest equities will rise. The UK 10 year government bond yield has been falling steadily since March and with an interest rate rise imminent the decrease will reach lower levels yet. Over the past few years we have seen significant contrasts between the yield and the FTSE. Between April and July 2005 a rise in the FTSE from 4,800 to 5,100 was aligned with a vast decline in the yield. In December 2009 a downturn in equities where the FTSE fell to 3,830 saw a strong rise in the yield. Between August 2010 and January 2011 the yield grew consistently whilst the FTSE fluctuated, despite showing overall growth. These contrasts are usually preceded by a sharp rise in yields then a lengthy dip, as we may be about to experience.
Equities sales and trading personnel will see an increase in opportunities open up as the month’s progress. They will have to look further than the typical names but they will find some exciting, challenging and rewarding career paths. For those who want to stay in the top tier global arena, the wait will be a little longer but not indefinite.
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