Norges Bank Investment Management (NBIM), the entity behind the world’s largest sovereign wealth fund, has initiated the process of shutting down its Shanghai office. It is marking another instance of major global corporations scaling back their operations in the world’s second-largest economy.
NBIM is responsible for managing Norway’s $1.4 trillion government pension fund.
It holds the title of the world’s largest individual investor in the stock market. As of the close of 2022, it possessed shares valued at approximately $42 billion in around 850 Chinese companies. The management of these investments will shift to its Asia headquarters located in Singapore, according to a statement released by NBIM.
The decision to close its Shanghai office is attributed to “operational considerations” and does not impact the fund’s investments or investment strategy in China, NBIM emphasized. Presently, there are eight employees at the Shanghai office, and the firm pledged to ensure an “orderly” closure process that complies with local regulations. This move aligns with a broader trend among international investors, who are diversifying their operations away from China amid growing uncertainties about conducting business in the country.
Earlier this year, the Ontario Teachers’ Pension Plan, one of the world’s largest pension funds, shuttered its China equity investment team based in Hong Kong. The company clarified in May that it would no longer maintain country-focused stock-picking teams in Asia.
Similarly, US tech-focused research and advisory firm Forrester Research announced plans to reduce the number of its China analysts around the same time. The firm explained that this restructuring was part of its global strategy, and it would serve its clients in China through its global research team.
China is currently grappling with economic challenges, including a sluggish real estate market that could trigger a larger debt crisis, rising youth unemployment, and declining confidence among households and businesses. Additionally, Beijing’s stringent measures against Western companies over national security concerns have unsettled foreign businesses. Some consulting firms have been subjected to police raids, and an espionage law was expanded in April to encompass a wider range of activities.
NBIM established its Shanghai office in November 2007. It was a year after receiving approval from the Chinese regulator to trade directly on mainland China’s stock exchanges. It marked the firm’s inaugural Asian office.
The investment management division of the Norwegian central bank revealed that it is currently in the process of relocating the operational functions for the Asia region to Singapore. It launches its office in 2010, three years after the Shanghai location.
