New Delhi

In response to a downturn in China's markets and as part of a global cost reduction initiative, fund manager Fidelity International (FIL) is reportedly planning to lay off approximately 20 employees from its main unit in China.

This decision, which represents around 16 per cent of the unit's total headcount, comes amidst a broader effort by FIL to streamline its operations worldwide.

While the specific roles of the affected employees have not been disclosed, Reuters cited sources familiar with the matter have revealed details of the downsising.

FIL's China unit, which currently employs 120 staff members, is expected to undergo restructuring as part of the company's cost reduction program, aimed at achieving savings of around $125 million in 2024 and reducing its global workforce by 9 per cent.

When questioned about the situation in China, a spokesperson for the London-based firm stated that the review process is ongoing, emphasising that no final decisions have been made regarding the China business.

 This move highlights the challenges faced by global asset managers in navigating the uncertainties present in the world's second-largest economy.

The difficulties encountered by asset managers in China's market are evident in recent developments, including stock market declines and a deepening debt crisis in the property sector and local governments.

Over the past 12 months, China's stock benchmark CSI300 has fallen by nearly 9 per cent, reaching a five-year low in the previous month.

This challenging landscape has prompted other financial institutions to take similar actions, such as Morgan Stanley, which reportedly laid off approximately 9 per cent of its asset management unit staff in China last December.

Additionally, US asset manager Matthews International Capital Management announced the closure of its Shanghai office.

FIL, headquartered in London, gained regulatory approval to operate in China's $3.7 trillion mutual fund industry in late 2022.

Despite the challenging market conditions, FIL's China unit manages three fund products with assets totaling $931 million as of January's end.

Notably, while FIL China's equity fund has experienced a 10.1 per cent decline since its debut in April 2023, its two bond funds have outperformed benchmarks during their limited time in operation.

This puts the spotlight on FIL's commitment to navigating the complexities of China's market and delivering value to its investors.

The mutual fund industry in China boasts a diverse landscape, with over 150 companies operating in the market, including prominent foreign asset managers like BlackRock, Schroders, and JPMorgan Asset Management.

The opening up of China's financial sector to foreign firms in 2019 paved the way for increased competition and opportunities for international players like FIL.

As a former international investment arm of Boston-based Fidelity Investments, FIL has a long-standing reputation and expertise in global asset management.

(With inputs from Reuters)