Equity researchers in Japan are rapidly becoming an endangered species. UBS and Citigroup are among the globals that have cut into their research teams, while HSBC has ditched equity research in Tokyo altogether. But the plight of the equity researcher doesn’t stop there.

Equity researchers are being cut across all distressed securities houses and investment banks, says Matt Anderson, manager of the banking and finance team at Legal Futures. And even firms that aren’t faring too badly are still making cuts.

“Those entities that are not so caught up in this mess have been able to make strategic ‘upgrades’ of underperforming researchers. Clearly this is not great for team morale, but when there are so many quality people leaving Goldman, Merrill, and so on, it is very difficult to resist getting rid of dead wood,” Anderson says.

Samuel Griffiths, associate director of financial services at Robert Walters Japan, says with equity divisions becoming drastically less profitable in the last six months, research divisions are an easy target for cost reduction without affecting short term revenues in the way that cutting sales people or traders would.

“The logic is that if they can maintain reasonable coverage of the markets then it won’t impact their business now, and then if markets pick up again they will be able to rebuild their coverage at that time,” adds Griffiths.

Until then, jobless researchers could struggle to find work. Although some junior equity researchers have been able to get back into the kind of roles and companies they were recruited from and then covered, Griffiths says opportunities are scarce.

“The financial crisis is starting to cause real problems across the entire economy and as such making a move out of the financial industry is not as easy as it once was. There are a number of candidates who have been looking for a new position for some time and any researchers who are let go now may well find it even more difficult moving forward,” he says.