Former Macquarie execs to hire analysts for new Japan advisory service

Tamagawa Dori, Tokyo, Japan. Photo: Thomas Schmitz/unsplash

Former Macquarie Group Ltd. executives are seeking to hire analysts for their nascent equity advisory company in Tokyo, betting that new banking regulations will prompt investors to deal more with independent firms.

Led by Chief Executive Officer David Shirt, Astris Advisory Japan was formed a year ago and now has two analysts, including David Gibson, who covers technology and is also chief investment adviser. The two Macquarie veterans are now looking to hire three to four more researchers by the end of the year, they said in an interview in Tokyo.

Rules known as MiFID II that require securities firms to separate research fees from trading commissions have increased competition, forcing sell-side brokerages to cut costs and giving smaller firms an opportunity to take business.

Investors are now allocating more resources to independent advisory houses in the wake of the rules introduced at the start of last year, Shirt said. Rather than paying for a suite of services from one bank, they can now choose from a menu, and small firms like Astris can charge much less because of their more modest cost base, he said.

Astris currently has about 30 clients, which are evenly split between hedge funds and long-only investors. Its other analyst is Masahiro Mochizuki, formerly of Credit Suisse Group AG, who covers the real estate and construction sector. Those to be hired could cover areas such as machinery, consumer or financials, depending on what investors want, Shirt said.

Independent stock analysis firms operating in Japan include Ikuhiro Yamada’s Japan Equity Research Co. and Yasuaki Fujine’s Toward the Infinite World Inc. Larger companies including the U.S.’s Morningstar Inc. also have operations in the country.

Underscoring the pressure of MiFID II on banks, BNP Paribas SA plans to cut the bulk of its Asia equity research team in Hong Kong and Singapore and instead use content from Morningstar, people with knowledge of the matter said earlier this month.

At Astris, Shirt said his firm could potentially open offices overseas but it’s too early to say when that might happen. “We’ve got to get Japan right first,” he said.

Bloomberg