Taking the view that Japan is no longer the utterly dominant market it once was in Asia, MF Global has put together its first Greater China equities research, sales and trading team. The UK brokerage is also about to open a Shanghai representative office and will next month become a trading member on the Tokyo Stock Exchange.
Peter Wells started at MF Global last week in Hong Kong as Asia-Pacific head of equity trading, having formerly been head of Japanese equity trading at Nikko Citigroup in Tokyo. He left that role in January 2009 before Citi sold the firm to Sumitomo Mitsui Financial Group, and has since been focusing on other interests.
MF Global already has execution teams in Hong Kong, Japan, India and Australia, but Wells joins in a newly created role to build and run a customer facilitation and equity trading capability for the Asia-Pacific region. He reports to Peter Lewis, chief executive for Hong Kong and Asia-Pacific head of equities.
Steve Conway has come in as head of sales trading for Greater China, having most recently worked for US agency broker BTIG in Singapore and previously for Credit Suisse, Barings Securities and Nomura across London, Tokyo and New York.
Joyce Kwan joined in November as head of Greater China sales from Daiwa Capital Markets where she was managing director of Asian equity sales in Hong Kong. She has also worked for Lehman Brothers and Macquarie Bank.
Elsewhere, Michael Steinberg joined in September as New York-based head of Asian equity sales, having previously been a managing director at JP Morgan in the same city.
Conway, Kwan, Steinberg and Wells all report to Lewis, as do the region’s equity research teams.
MF Global has also built up a Greater China research team in Hong Kong over the past few months, bringing the territory's research headcount to 13.
Adrian Ngan is head of property research, having moved in November from China Construction Bank International, where he was head of Hong Kong and China property research.
Running consumer research is Mohan Singh, who arrived at MF Global also in November as head of consumer research, from his most recent role as head of Asian consumer research at Macquarie Securities.
On the commodities research side, one of MF Global's main strengths, Natalie Chan joined in November as head of coal and mining from commodity group China Minmetals where she was a fund manager. Helen Wang came on board as head of basic materials research this month from DBS Vickers Securities in Hong Kong.
In charge of transportation research is Geoffrey Cheng, who started in November, having previously worked at the Daiwa Institute of Research in Hong Kong, where he was a director of equity research.
Voon Lai now runs technology, media and telecoms research at MF Global, having joined in September from Standard Chartered Securities (formerly Cazenove & Co).
Head of financials research Stephen Chan joined back in April; like Cheng, he had also been a director of equity research at the Daiwa Institute of Research in Hong Kong.
Meanwhile, MF Global added Mike Blomfield as managing director of Asia-Pacific in November. Based in Singapore, he replaced Karel Harbour, who was director of operations and had been interim Asia-Pacific MD after Larry O’Connell resigned earlier in 2010.
Blomfield was most recently CEO of Dendiri Advisory, an M&A and strategy consultancy. He has also been head of Commonwealth Bank of Australia’s CommSec, Australia's largest retail brokerage, and head of CBA’s equities division, among other posts.
This mass hiring by MF Global follows similarly aggressive moves in Japan where the broker started building an equities capability in 2009. The team in Tokyo is now 23-strong and headed by Graham Elliott who joined in mid-2009 from US investment bank Jefferies.
The biggest part of MF Global's client base comprises buy-side firms – hedge funds, long-only asset managers and institutional investors. The firm has deliberately built its equities business in Asia around institutional customers, says Peter Lewis. “We didn’t want to be an execution-only firm; we wanted to offer research, get involved in equity placements and IPOs, customer facilitation and so on,” he adds.
So why this increased focus on Greater China now? Lewis says one reason is MF Global's decision to focus its research specifically on four key countries/regions where it feels the main opportunities lie – Australia, Greater China, India and Japan – and where there is strong overlap with the firm’s core strengths in the commodities, financial and consumer sectors.
Moreover, fund managers used to make a clear distinction between Japan and the rest of Asia, says Lewis, but that line is becoming eroded as markets in the rest of Asia develop. This trend is demonstrated by the fact that institutional clients are now starting to combine their Japan and Asia ex-Japan dealing desks, he adds.
“You can't just focus on one market anymore,” Lewis tells AsianInvestor. “China and India are developing rapidly and the whole region is attracting strong investment; it's not enough to cover just the large markets such as Japan.”
He says MF Global expects to open a rep office in Shanghai in the first quarter, although it may be some time before the broker attains trading membership on any mainland exchanges. To do so, current regulations require a JV partner, most likely in the form of a futures commission merchant or securities firm.
Still, MF Global FXA Securities, a wholly owned subsidiary of MF Global, was approved last week as a trading participant member of the Tokyo Stock Exchange, effective February 1. The firm has also applied for membership of the Osaka Securities Exchange and Jasdaq, says Lewis, and hopes to achieve it within the next couple of months.
MF Global is also a member on various other Asia-Pacific exchanges, including Australian Securities Exchange, Hong Kong Exchanges and Clearing, India's Bombay Stock Exchange and National Stock Exchange, Singapore Exchange and Taifex (through its joint venture with Taiwanese financial group Polaris).
The firm is also looking to broaden its product offering in Asia. MF Global's research strengths have traditionally been in commodities and financials, but it added to its capabilities by acquiring US-based policy-focused investment research firm Washington Research Group.
“This probably makes our offering more unique than other brokers in Asia,” says Lewis. There's been a lot of interest in the policy research capability, he adds, particularly as many Asian companies have operations in the US and so are affected by regulatory changes and policy developments there.