Fidelity International plans to cut 16% of China fund unit jobs, sources say

Filatex India

19/03/2024 04:11

(Adds other foreign asset managers job cuts in paragraph 6,
market performance in paragraph 7, FIL product return in
paragraph 9)
    By Selena  Li and Xie Yu
       HONG KONG, March 19 (Reuters) - Fund manager Fidelity
International (FIL) is planning to lay off 20 people at its main
China unit, two sources familiar with the matter said, a
reduction that coincides with a downturn in China's markets and
as the firm cuts staff worldwide.
    The cuts at FIL's wholly-owned China fund unit, which
currently employs 120 staff, is equivalent to around 16% of its
total headcount, according to the sources, who declined to be
named as they were not authorised to speak to media. The sources
did not disclose the roles of the employees being laid off.
    The firm, which manages $776 billion of client assets,
kicked off a broader cost reduction programme globally earlier
this month which is expected to save around $125 million in 2024
and make 9% of its workforce redundant.
    Asked about the China unit, a spokesperson for the
London-based fund house said a review of previously reported
global role reductions is ongoing across business lines and
geographies and no decisions has been made about its China
business.
    The downsizing in China by FIL underscores the challenges
global asset managers face in navigating uncertainties in the
world's second largest economy, where stock market routs and a
deepening debt crisis in the property sector and local
governments have battered investor confidence.
    China's stock benchmark CSI300  .CSI300  fell by almost 9%
over the last 12 months, and hit a five-year low last month. 
    Amid these difficult market conditions, Morgan Stanley
 MS.N  laid off about 9% of staff at its asset management unit
in China in December, Reuters reported, citing sources. 
    U.S. asset manager Matthews International Capital Management
also said it was closing its Shanghai office.
    London-based FIL secured regulatory approval to conduct
business in China's $3.7 trillion mutual fund industry in late
2022. The unit manages three fund products with 6.7 billion yuan
($931 million) in assets as of the end of January, company
reports show.
    FIL China's equity fund, its first mutual fund product,
shrank 10.1% by Monday since its April 2023 debut and
underperformed the 8.6% loss of a benchmark it has set,
according to the company’s official website.
    However, its two bond funds, both in operation for just a
few months, are so far outperforming benchmarks.
    China has more than 150 companies in its mutual fund
industry, including foreign asset managers BlackRock  BLK.N ,
Schroders  SDR.L , and JPMorgan Asset Management. 
    Foreign financial companies were permitted to run their
local businesses via wholly-owned entities in 2019.
    FIL was the former international investment arm of
Boston-based Fidelity Investments before it was spun off.
($1 = 7.1981 Chinese yuan renminbi)

 (Reporting by Selena Li and Xie Yu; Editing by Sumeet
Chatterjee and Miral Fahmy)
 ((Selena.Li@thomsonreuters.com; +852 39525868;))