A couple of years back, when London and Wall Street were suffering but China was growing, investment bankers in Hong Kong were raking in huge salaries and bonuses and enjoying perks such as first class business travel.
Those days are over. Hong Kong airline Cathay Pacific, the airline of choice for bankers due to its well-established loyalty scheme and extremely swank airport lounges, revealed in its 2012 annual report (pdf, p.2) that its all-important financial customers were taking fewer flights, leading in part to an 83% nosedive in annual net income.
Hong Kong investment bankers’ pay packages are now below New York levels. The big global banks’ branches in the territory are suffering from a dearth of IPOs amid China’s economic slowdown, and hedge fund traders are fleeing.
Cathay’s woes are mirrored in Hong Kong’s high-end restaurants, bars and hotels. And because highly paid investment bankers and hedge fund managers have been a huge source of support for the territory’s incredibly expensive property market, real estate prices may soften. Cheung Kong Holdings, one of the territory’s largest property developers, announced last week it was cutting prices of new homes in the banking hub of West Kowloon, home to Morgan Stanley, Credit Suisse and Deutsche Bank.
But every cloud has a silver lining. It could well be a great time to look out for bargain seats near the front of Cathay’s planes. The Hong Kong airline has been offering cheap business class fares and also introduced premium economy seating on all US flights.