Dubai-based Arqaam Capital is closing its South African office as the investment bank joins other brokers paring back operations in the continent’s financial-markets hub, reported Bloomberg.
The investment bank, which has been in Johannesburg since 2014, told its clients that it is ceasing research coverage in South Africa. Arqaam employs about 17 people in the city.
Arqaam stated that it has informed its employees that it has commenced a process which will lead to a cessation of all activities in its Johannesburg office, an orderly wind-down of operations will then commence.
Profit margins for equity-trading companies that offer research have been squeezed in South Africa and other markets by the cost of MIFid II regulations, as well as a shift toward passive investing and a fall in trading volumes.
The shutdown by Arqaam, which focuses on emerging markets, follows an announcement by Macquarie Group in October 2019 that it’s closing its cash-equities business in South Africa. Deutsche Bank’s South African unit has made significant job cuts, while Credit Suisse Group has also reduced its presence in the country.
Similarly, Citigroup has been leaving some equity research posts vacant and moving other functions.
Arqaam said it will focus on markets where it has a stronger presence.
“This decision enables the investment bank to deploy additional capital in its core markets of the Middle East and North Africa region and comes as part of an effort to sharpen its focus on where it has a competitive franchise and a growing market share,” said Arqaam.