Morgan Stanley's asset management business in China has cut about 9% of its workforce in China, according to people with knowledge of the matter, as the country's rising ** has dampened its 3Prospects for the $8 trillion** sector.
Morgan Stanley Investment Management China began laying off employees, a move that affected about 15 employees, who spoke on condition of anonymity because they were not authorized to talk to **.
It will be Morgan Stanley's first layoffs since it acquired a 36% stake in a loss-making business from its local partner for about $54 million in 2023. The company renamed the unit a wholly-owned subsidiary in June.
The layoffs highlight the challenges faced by global financial firms, including JPMorgan Chase & Co. (JPMorgan Chase & CoN) and BlackRock (BLK.)n), in the face of the world's second-largest economy, the prolonged economic downturn has even hit the market there.
China's blue-chip CSI300 index (. CSI300) fell to a five-year low last month after being hit hard by an unprecedented debt crisis in the property sector and the lack of large-scale stimulus, after being hit by an unprecedented debt crisis in the property sector and the lack of large-scale stimulus.
The weakness of the market has dampened the appetite of local investors, leading to a large number of actively managed *** redemptions. Morgan Stanley's China** division laid off other China-focused jobs in the financial sector, including investment banking.
China's onshore** market grew by 6% in assets last year after growing 1% in 2022, slowing from a staggering annual growth of more than 27% in 2020 and 2021.
According to the company's disclosure, Shenzhen-based Morgan Stanley IM China has declined every quarter after its assets under management peaked in June 2021, with its **assets from a peak of 53% to RMB19.8 billion at the end of 2023 (27.2).$500 million).
The earnings results of the former joint venture partner CEFC** showed that the division recorded an operating loss of $48.5 million in 2022 and $23.2 million in the first half of 2023.
For the first time, the U.S. company hired Alex Zhou, chief investment officer at Morgan Stanley im China, to direct the business. Zhou previously worked at AIA, where he was Head of Equity. Reducing and hiring Alex's staff is part of Morgan Stanley's move to realign its business after gaining full ownership, people familiar with the matter said.
One of the first two said that "being defensive" in the face of weak fundraising prospects was also a key reason for the layoffs. Sentiment in China** has improved since March, following a series of measures to restore confidence, including re-restricting short selling and cracking down on trading misconduct. Morgan Stanley said in a research note last week that "the massive global outflows that we've seen over the past few quarters are largely complete."
Peter Alexander, founder and managing director of Z-Ben Advisors, a Chinese consultancy, said foreign companies may simply overhaul or cut the Chinese sector out of "inertia policy". It's more about putting pressure on headquarters to reduce spending anywhere.