New China Fund Management Co. plans to cut as many as 30% of employees as its new shareholder seeks to revive growth following an asset slump, according to people familiar with the matter.
(Bloomberg) — New China Fund Management Co. plans to cut as many as 30% of employees as its new shareholder seeks to revive growth following an asset slump, according to people familiar with the matter.
The company, managing 57.6 billion yuan ($8.3 billion) as of Dec. 31, is planning the reductions after state-owned Financial Street Group became the controlling shareholder in January, the people said, asking not to be named because the matter is private. New China Fund has about 200 employees, according to the Asset Management Association of China.
The steep job cuts highlight growing challenges facing smaller players as competition intensifies in the 27 trillion yuan mutual fund industry and markets remain choppy. New China Fund’s assets under management fell by nearly 34% in the second half of last year, when stocks slumped and a bond market rout triggered redemptions.
“This is not simple layoffs,” New China Fund said in a response to Bloomberg questions. “Departures at certain departments are natural attrition based on 2022 performance reviews and a normal step to strengthen risk management and promote long-term stable operations,” it said, adding that the company’s new controlling shareholder focuses more on its development and efficiency.
Read how some China funds are trying to stem redemptions
Chairwoman Zhai Chenxi, dubbed the “Queen of Bonds” by local media, resigned late last month for personal reasons. She was replaced by General Manager Yu Chunling, who’s now the acting chairwoman.
New China Fund, based in the southwestern metropolis of Chongqing, had seen a rapid expansion before the recent setback. Its bond funds under management almost tripled while money-market funds jumped about ninefold in less than three years under Zhai, who earned her reputation for bond trading at former employer China Development Bank. That pushed the firm’s assets to a record 86.8 billion yuan as of June 30, according to East Money Information Co. data.
Chinese regulators have recently accelerated approvals for global mutual fund managers, putting pressure on local players. Units of Fidelity International Ltd. and Neuberger Berman Group got the nod to start business in late 2022, while Morgan Stanley and JPMorgan Chase & Co. won full control of joint ventures earlier this year. AllianceBernstein Holding LP gained permission to set up its unit this month.
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