Client demand drives cut-throat Asia ideas competition
Investor demand for new investment ideas and technology in Asia is driving fierce competition among providers of those services, as independent agency brokers and smaller firms compete against the large, research-driven models of the big banks. The competition for client business in the Asia-Pacific equity secondary market is becoming more intense, and while the top-ranked research firms are very profitable, some market participants question just how long some of the new entrants will survive. There’s an opportunity, believes Jesse Lentchner, chief executive, Asia Pacific, at BTIG, for firms without the scale and resources of a global investment bank to win market share. “I think the bulge-bracket firms have become too structured,” says Lentchner. “Your typical salesperson there spends 60% of his day selling research, 20% selling deals and 20% on internal admin. If he’s extraordinary, he or she then finds extra time in evenings or weekends to work on ideas for clients. Without the research, the deals, the admin, our salespeople can focus on ideas.”
Maintaining teams of analysts across Asia’s main equity markets is an expensive business, and with clients still hungry for research the smaller agency brokers can’t hope to compete on how comprehensive or frequent their coverage is.