The past week’s slump in global stock markets has made it harder to predict whether Asian share sales will match last year’s record in 2007, Credit Suisse’s new investment banking chief Paul Calello said.
“The challenge of another record year is somewhat at the mercy of the markets and how much volatility and uncertainty they provide,” said Calello. In May, he correctly forecast 2006 would be the best-ever year for Asian stock sales.
A 6% decline in the MSCI Asia-Pacific Index in the past week may curtail investor demand that drove stock sales in the region to $186.8 billion (Rs8.4 lakh crore) last year, generating record fees for Credit Suisse and its rivals. Chinese stocks on 27 February suffered their biggest one-day rout in a decade, triggering a slump in global shares.
As the sell-off spread across the globe, it cast a pall on the outlook for IPOs (initial public offerings). Standard & Poor’s 500 Index declined 4.4% last week and the Dow Jones Industrial Average fell 4.2%.
The recent rout began with the drop in Chinese stocks, which was sparked by concern that the government will tighten controls on investment and lending for share purchases.
Calello, who will replace Brady Dougan as the firm’s investment banking head declined to name his successor. Investment banks have been focusing their expansion in China and India—world’s two fastest-growing economies.
Credit Suisse will resume its brokerage business in India this month, Calello said. It was suspended from trading in India in 2001 after the regulator found evidence of price manipulation on several trades.
Calello spoke to reporters in Singapore after opening the firm’s support center at One Raffles Quay in the marina area next to the city’s financial district. The center supports the bank’s asset management, private and investment banking businesses, and can accommodate 1,400 people.
“We have already filled a significant portion of those positions,” he said. “The market environment for hiring professionals in the market has become more competitive.”