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About 90 jobs in the United States will be affected, Simone
Wheeler, the global head for communications, said. She, however,
said that this was only a partial retreat and CLSA had plans to
expand in the U.S. by launching fixed-income services this year.
CLSA, owned by China's CITIC Securities, started its equity
business in the United States in 2009 and gradually build up a
team of more than 180 people. It even hired people for research,
sales and trading in the U.S. in late 2015.
"It's probably true to say that the decline in payment for
equity research had an impact on our business. It wasn't one
contributing factor, it was probably many but that was the
significant one," Wheeler told Reuters on Tuesday.
"Increasingly, we were finding that it was becoming more
difficult certainly over the past year or so to make it a viable
business," she said, adding CLSA would continue to have a sales
team in the United States to sell Asian stocks to investors.
Among the jobs to be hit by CLSA's decision to wrap up U.S.
equity research would be that of prominent bank analyst Mike
Mayo and a senior technology research analyst Ed Maguire.
Mayo is an outspoken analyst known for his tough questions to
management teams of big banks, including Citigroup Inc, Bank of
America Corp and JPMorgan Chase & Co.
CLSA's partial retreat from the United States comes at a time
when, with investment firms cutting costs and portfolio managers
combating a barrage of easily available information, financial
research shops around the globe are looking for new ways to keep
their product relevant.
The long-running practice of paying for research through trading
commissions is also being upended by new regulations in Europe,
known as the revised Markets in Financial Instruments Directive,
or MiFID II. Part of the overhaul will force investors in the
European Union to pay for research directly.
CLSA's latest move in the United States, however, is not a
reflection of its waning global ambition, Wheeler said, adding
the firm, together with CITIC, planned to launch fixed-income
and corporate advisory services in that market this year.
"The business mix will shift in the coming years and it will be
focused more on where we see client demand," she said. "CLSA
Americas business has every reason to expand, just not in the
equities research space."
(Reporting by Sumeet Chatterjee in Hong Kong and Dan Freed in
New York; Editing by Cynthia Osterman and Himani Sarkar)
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