Norway's $1.4 trillion investment fund to close its China office
Norges Bank Investment Management (NBIM), the operator of the world's largest sovereign wealth fund, has initiated the closure of its Shanghai office, reflecting a broader trend of major global companies scaling back their operations in China, the world's second-largest economy.
NBIM, responsible for managing Norway's $1.4 trillion government pension fund, holds the title of the largest individual investor in the global stock market. As of the close of 2022, it possessed approximately $42 billion worth of shares in around 850 Chinese companies. It has announced that these investments will be overseen from its Asia headquarters in Singapore going forward.
The decision to shutter the Shanghai office has been attributed to "operational considerations" and is asserted not to impact the fund's investments or its overall investment strategy in China, according to NBIM's statement issued on Thursday.
The Shanghai office currently employs eight individuals, and NBIM is committed to ensuring an organized and compliant closing process for all affected personnel in accordance with local regulations. This move aligns with a trend among international investors seeking to diversify their operations away from China amid growing uncertainties surrounding conducting business in the country.
Earlier this year, the Ontario Teachers' Pension Plan, one of the world's largest pension funds, closed its China equity investment team based in Hong Kong, opting to discontinue country-focused stock-picking teams in Asia. Similarly, US tech-focused research and advisory firm Forrester Research revealed plans to reduce its China analyst workforce around the same period, attributing the move to a broader global restructuring effort, with client service in China being handled by its global research team.
China's economic challenges, including a struggling real estate market and rising youth unemployment, coupled with diminishing confidence among households and businesses, have contributed to this trend. Beijing's crackdown on Western companies over national security concerns has also unsettled foreign businesses, with consulting firms facing police raids, and the expansion of espionage laws in April to encompass a wider spectrum of activities.
NBIM initially established its Shanghai office in November 2007, shortly after receiving permission from Chinese regulators to directly trade on mainland stock exchanges. This marked the firm's first Asian office. NBIM, as the investment management arm of the Norwegian central bank, is currently in the process of transitioning operational functions for the Asia region to Singapore, where the office was established in 2010, three years after the Shanghai office's inception. The Singapore office has progressively evolved into the central hub for the entire Asian region, handling all operational functions, including those related to China.