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Job cuts at Fidelity International's China unit amid market downturn


Job cuts at Fidelity, financial news

Fidelity International (FIL), a renowned fund manager, is reportedly planning to reduce its workforce by 20 individuals in its primary Chinese division. This decision aligns with the current downturn in China's financial markets and is part of a broader global staff reduction initiative by the firm.


Presently, FIL's China fund unit boasts a team of 120 employees, suggesting the proposed cuts would amount to about 16% of its total workforce. These plans, shared by anonymous sources due to confidentiality constraints, have not been confirmed publicly.


FIL, with a substantial management portfolio of $776 billion in client assets, recently commenced a cost-saving strategy at the global level. This program is anticipated to yield savings of approximately $125 million in 2024, with a 9% reduction in its global workforce.



Regarding its China operations, FIL has stated that the evaluation of the global role reductions is still in progress, covering various business lines and regions, with no definite decisions yet made for its China business.


These downsizing plans in China highlight the complexities faced by global asset management firms in China, the world’s second-largest economy. Challenges include a volatile stock market, a deepening debt crisis in the real estate and local government sectors, and waning investor confidence. The CSI300, China's stock benchmark, has experienced a nearly 9% decline over the past year, touching a five-year low recently.


Other global players in the asset management industry have also made similar moves in China. Morgan Stanley reportedly let go of about 9% of its staff in its Chinese asset management unit in December, as per Reuters. Additionally, Matthews International Capital Management, a U.S.-based asset manager, announced the closure of its Shanghai office.



In 2022, FIL obtained regulatory approval to engage in China's sizable $3.7 trillion mutual fund market. As of January, the China unit was managing three fund products with assets totaling 6.7 billion yuan ($931 million).


Its first mutual fund product, an equity fund, has witnessed a 10.1% decrease in value since its debut in April 2023, underperforming its benchmark. However, FIL's two bond funds in China have shown promising performance, exceeding their respective benchmarks.



China's mutual fund sector includes over 150 companies, with several foreign asset managers like BlackRock, Schroders, and JPMorgan Asset Management. Since 2019, foreign financial firms have been permitted to operate their local businesses through wholly-owned entities.


It's worth noting that FIL was originally the international investment branch of Boston-based Fidelity Investments before becoming an independent entity. Source: Reuters.


19.03.2024



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