Morgan Stanley cuts 9% of China fund unit staff amid market rout, sources say


  • Morgan Stanley’s China fund unit started reducing headcount in December, sources say
  • Morgan Stanley cuts China fund staff amid shrinking assets, operating losses
  • Morgan Stanley rebranded unit as wholly owned in June 2023
  • China’s CSI300 index sank to five-year lows last month

HONG KONG, March 6 (Reuters) – Morgan Stanley (MS.N), has laid off about 9% of its staff at its asset management business unit in China, two people with direct knowledge of the matter said, as the country’s spiralling stock market dampens prospects for its $3.8 trillion fund sector.

Morgan Stanley Investment Management China started reducing headcount in December and the move has impacted about 15 employees, the people said on condition of anonymity as they were not authorised to speak to media.

This would be the first time Morgan Stanley has cut staff at the China fund unit since it bought out its local partner’s 36% stake in the loss-making business for about $54 million in 2023. It rebranded the unit as a wholly owned subsidiary in June.

Morgan Stanley declined to comment.

The downsizing underscores the challenges that global financial firms, including JPMorgan (JPM.N), and BlackRock (BLK.N), face in the world’s second-biggest economy as a protracted economic malaise batters markets there.

China’s blue-chip CSI300 index (.CSI300), sank to five-year lows last month, after having lost 11% in 2023, pummelled by an unprecedented debt crisis in the property sector and a lack of large-scale government stimulus.

The weakening of the Chinese market has hit local investors’ appetite, resulting in massive redemptions from actively managed equities funds.

The job cuts by Morgan Stanley in the China fund unit adds to the dour outlook for other China-focused jobs in the financial sector including investment banking.

China’s onshore fund market saw a muted 6% growth in assets last year after a 1% rise in 2022, slowing down from a staggering annual jump of more than 27% in both 2020 and 2021.


Shenzhen-based Morgan Stanley IM China saw its assets under management decline every quarter after reaching a peak in June 2021, with assets in its funds plunging 53% from the peak to 19.8 billion yuan ($2.75 billion) at end-2023, according to company disclosures.

The unit recorded an operating loss of 48.5 million yuan in 2022 and 23.2 million yuan in the first half of 2023, earnings results of its former joint venture partner Huaxin Securities showed.

The U.S. firm for the first time hired a chief investment officer at Morgan Stanley IM China, Alex Zhou, to steer the business. Zhou has previously worked at AIA, where he was head of equity.

The headcount reduction and hiring of Zhou are part of Morgan Stanley IM China’s initiatives to recalibrate the business after taking full ownership, a third source with knowledge of the matter said.

One of the first two sources said to “play defensive” amid weaker fundraising prospects was also a key reason for the cuts.

Sentiment in China’s stock market has improved since March after Beijing undertook a raft of measures to revive confidence, including fresh curbs on short-selling and a crackdown on trading misbehaviours.

In a research note last week, Morgan Stanley said it believed “the massive global fund outflows we saw throughout the past several quarters has largely completed”.

Peter Alexander, founder and managing director of China consultancy Z-Ben Advisors, said foreign firms might just be rolling out overhaul or cuts in China units out of “policies of inertia”.

“It is more about pressure from the headquarters to reduce expenses anywhere and everywhere,” he said.




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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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