Fidelity International (FIL) is reportedly planning to lay off approximately 20 employees from its main unit in China as part of a global cost reduction initiative in response to a downturn in China’s markets.
Details of the Layoffs
- This decision represents around 16 per cent of the unit’s total headcount.
- The affected employees’ specific roles have not been disclosed, but sources familiar with the matter have revealed details of the downsizing.
- FIL’s China unit, currently employing 120 staff members, is expected to undergo restructuring as part of the company’s cost reduction program.
Market Challenges
The move to lay off employees in China highlights the challenges faced by global asset managers in navigating uncertainties in the world’s second-largest economy.
Recent Developments
- China’s stock benchmark CSI300 has fallen by nearly 9 per cent over the past 12 months.
- Other financial institutions, such as Morgan Stanley and Matthews International Capital Management, have also taken similar actions in response to the challenging market conditions.
FIL’s Operations in China
Despite the market conditions, FIL’s China unit manages three fund products with assets totaling $931 million as of January’s end.
Performance Highlights
- FIL China’s equity fund has experienced a 10.1 per cent decline since its debut in April 2023.
- However, its two bond funds have outperformed benchmarks during their limited time in operation.
Industry Landscape
The mutual fund industry in China includes over 150 companies, with prominent foreign asset managers like BlackRock, Schroders, and JPMorgan Asset Management operating in the market.
Regulatory Approval and Expertise
FIL, headquartered in London, gained regulatory approval to operate in China’s mutual fund industry in late 2022, showcasing its commitment to navigating the complexities of China’s market.
As a former international investment arm of Boston-based Fidelity Investments, FIL brings expertise in global asset management to the table.