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The Asian Debt Asset Class & Its Impact on the Economist

Date: 01 July 2008

As Asian Debt becomes more of its own asset class, what effect does it have on the role of the Economist and Economist hiring trends across Asia?

Whilst the European and US economies have struggled over the last few years, we have witnessed remarkable growth in major Asian Economies. Capital controls and underdeveloped capital markets have often been attributed as reasons for past successes in the region, as well as potential pitfalls hindering their future growth prospects. Thus to avoid such pitfalls, in recent years we have seen the emergence of a new model that champions growth in the capital market and in particular the debt market. As such, we have seen Asian Debt increasingly becoming more of an asset class of its own.

Nevertheless, as always, the sustainability of this growth remains questionable.

Until now, Economists’ main functions have been to provide theoretical justification to observed statistics of economic phenomena, discuss policy implications, provide qualitative and quantitative forecasts of the economy and assess risks, opportunities and strategies for investing in and developing various markets and economies.

So what bearing does this emergence of a new Asian Debt asset class have on the structural responsibilities of an economist and what challenges does it present?

 

Economists will be required to:

 1. Become an Economic Historian  Despite the scale and complexity of global markets, economists will need to study past successes and mistakes from previous examples of the liberation of capital markets in both developed and emerging markets, in order to advise investors and stakeholders.

2. Become an Economic Risk Controller  It is crucial for Economists specialising in Asian Debt to uncover areas within the current economic systems which are exposed to market failure. Economists will firstly be required to conduct Macro Economic analysis of return/risk profiles across regions and asset classes of Asian Debt. They will also need to communicate with global counterparts to class the Asian Debt Asset Class within the global portfolio and devise investment strategies riding with the macro implicative moves of foreign exchanges, interest rates, GDP, CPI, IP and corporate earnings.

3. Become an Economic Regulator  In preparation for the liberation of financial markets and the onset of a new stage of normal economic growth, Economists will be required to scrutinize the quality of new economic governance, policy, regulation and legislation adopted, in order to ensure full benefits of liberation and avoid adverse activities associated with this market shift.

4. Become an Economic Theorist  New thought leaders are needed to monitor trends associated with Asian market liberalisation and thus guide healthy development throughout the region. For example, how the growth of China’s offshore Fixed Income and Foreign Exchange market in Hong Kong (one of the largest offshore markets globally) will affect onshore financial market liberalisation and Hong Kong’s convergence with China.

5. Become a Data Investigator  Economic analysis and predictions are only as accurate as the data used to calculate them. Due to the limited nature of quality data, Economists must be more critical of the quality of datasets available, the possible calculation error and data sample size, which might limit consistency of econometric eliminators.

 

 

So what affect has this had on hiring?

 1. Demand for Wider and Deeper Regional Knowledge  As firms look to expand their regional coverage across Asia, there has been an increase in hiring of Asian economists with strong experience working across the whole region. On the contrary, we have seen a decrease in opportunities for candidates with a specialist focus on a particular country or sub region despite that fact that many such candidates may have had exposure across various parts of the region and have transferable skills. In addition is the need for deeper regional knowledge, resulting in a preference for experienced senior candidates, which are increasingly running in short supply.

2. Demand for Mandarin Speakers  There is a wide demand for Buy Side teams and family offices to beef up their economic and macro research teams and since these teams are more local than global banking establishments, there is an increased need for local mandarin speakers, which again are in short supply.

3. A shift in the profile of a “top” candidate  Firms are increasingly favouring candidates with experience in research houses, central banking and consultancies, who have broader experience in terms of coverage and more advanced client facing skills. This replaces the previously sought after profile of the top tier investment banking candidate. A strong educational background however is still required, with candidates ideally qualifying with a PHD from a good school, having the ability to demonstrate strong analytical skills as well as having links and contacts with policy makers.

Alongside this rise in the Asian Debt Asset Class, we haven’t necessarily seen a rise in salaries, but instead, these changes have emphasized to candidates that they need stability, a respect for macroeconomics and an understanding of its importance in the world of investing. Based on the ideal set of criteria above, ideal candidates for Economist positions are in short supply, so we have seen many firms rapidly hiring to ensure they snap up the best talent while it is still available.

 

Contact Us: Should you wish to discuss these trends or expanding your team, contact strategy@selbyjennings.com /             +44 (0) 207 019 4135     

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