By Selena Li and Kane Wu
HONG KONG, March 11 (Reuters) - Morgan Stanley has started hiring contract staff in Hong Kong to handle a surge in stock listings, aiming to control costs while meeting stronger demand in the Asian financial hub, three sources with direct knowledge of the matter said.
The move, a first for a Wall Street bank in the region, underscores shifting hiring strategies in Hong Kong's ultra-competitive investment banking industry.
A surge in initial public offerings has pushed up demand
for talent but volatile markets make it tough for global dealmakers to make costly permanent hires, the sources said.
"Their (contractors') total package is significantly lower than a banker hired on permanent headcount. Morgan Stanley could spend less and take up more deals," one of the people said.
Since late last year, Morgan Stanley's investment banking division has recruited staff on one-year contracts to work on due diligence for listing applications, the three sources said.
The IPO transaction support team, formed in the fourth quarter of 2025, consists of about 10 individuals, one of the sources said.
The team participates in due diligence work for Hong Kong and U.S. IPOs, mainly for Chinese companies, including conducting site visits and due diligence meetings, according to the sources.
The sources declined to be named as they are not authorised to speak to media. Morgan Stanley declined to comment. The bank's hiring of contract staff in Hong Kong has not been previously reported.
While it is not uncommon for global banks to hire temporary staff for various functions to cope with a sudden surge in demand or to meet regulatory requirements in major hubs, the practice is not commonplace in investment banking, especially in Asia.
War in the Middle East has weighed on sentiment, affecting the market debuts of three Chinese companies in Hong Kong this week and clouding the outlook for IPOs after a strong start to the year.
Morgan Stanley, ranked No.1 equity capital market (ECM) bookrunner in 2025 with $25.3 billion raised across 132 deals excluding Chinese mainland-listed shares, retained the top spot from a year ago, according to Dealogic.
SWELLING PIPELINE AND TALENT SHORTAGE
Some Wall Street banks went on a job-cutting spree a couple of years ago in Hong Kong as a slow recovery in company listings and M&A deals, partly due to an economic downturn and changing regulations in China, forced them to ramp up cost controls.
The banks have been cautious in expanding their investment banking teams in the financial hub since then despite a rebound in deals, as banks remain cautious about the mid- to long-term deals outlook and costs, industry sources say.
Hong Kong was the world's top listing venue in 2025 with IPO proceeds surging 231% to $37.4 billion and total equity capital market fundraising rose 164% to $103 billion, according to data from the Hong Kong stock exchange.
The pipeline for new deals is strong with 530 main board applications filed as of February 27, exchange data showed.
A swelling pipeline and a shortage of talent risks hurting the booming listings business in Hong Kong of investment banks, mainly those from China, and tests their ability to meet new regulatory rules, industry sources and analysts say.
The Hong Kong Securities and Futures Commission last month warned 13 banks over "serious deficiencies" in IPO applications, asking them to conduct a comprehensive review and cap the number of deals a signing principal can work on simultaneously at six.
Morgan Stanley acted as sponsor, which guides an issuer through the IPO process in Hong Kong, in 10 listing applications as of mid-February, among the three global banks that took up the most clients in the capacity, data compiled by Reuters show.
Morgan Stanley is also hiring full-time dealmakers to work on market listings, and it has a handful of potential candidates in the pipeline, one of the sources said.
(Reporting by Selena Li and Kane Wu in Hong Kong; Additional reporting by Yantoultra Ngui in Singapore; Editing by Sumeet Chatterjee and Jacqueline Wong)
