Norway’s $1.9 trillion wealth fund starts winding down China office as Asia hub shifts to Singapore

OSLO – Norway’s US$1.4 trillion (S$1.9 trillion) sovereign wealth fund has started winding down its only office in China as Singapore takes over as its hub in Asia.

The fund is initiating the process to close its representative office in Shanghai due to “operational considerations”, Norges Bank Investment Management said on Thursday.

The move does not affect the investment strategy in China, it said.

That mirrors a shift among other international investors, with banks including Goldman Sachs and Morgan Stanley scaling back ambitious expansion plans in China amid a deteriorating geopolitical climate.

Goldman recently revised projections on its five-year plan and has let go more than a 10th of its workforce on the mainland after doubling headcount to over 600.

The Ontario Teachers’ Pension Plan announced earlier in 2023 it was shutting an Asia equity investment team in Hong Kong, cutting five jobs, while Moody’s shuttered the China operations of its risk management division, laying off about 100 people, people familiar with the matters said in November 2022.

“We will ensure that the closing process is conducted in an orderly manner for all affected persons,” the fund said, adding that there are currently eight people in the Shanghai office, which opened in 2007.

The Norwegian fund has cited concerns about rising tensions between the United States and China as the biggest geopolitical risk that it is facing.

On Thursday, though, it said the closure of its Shanghai office was “an operational decision”.

“Our investments remain unchanged. We use a combination of internal expertise and external managers to invest in China and will continue to do so,” deputy chief executive Trond Grande told Reuters.

The fund held some US$42 billion across 850 Chinese and Hong Kong companies at the end of 2022, down from a peak of US$47 billion in 2020, according to fund data.

The staff in the Shanghai office reacted angrily to Thursday’s announcement, according to a Reuters witness.

Mr Grande said the fund would ensure the closure was conducted “in an orderly manner” for those affected and “in line with local requirements and procedures”.

Geopolitical risk

The fund did not reply to a question as to whether China-US tensions or cyber-security issues played a part in the decision to close the Shanghai office.

Mr Grande told Reuters in August after the fund’s half-year results that its biggest worry geopolitically “is a world where the two superpowers are increasingly in competition with each other and hence creating a decoupled (world economy)”.

In March, the Norwegian central bank, which includes the fund, banned its employees from using Chinese-owned TikTok after receiving advice from Norway’s intelligence agencies over security issues.

Among operational reasons driving Thursday’s move is that its Singapore office “has demonstrated that it can serve as a hub for the entire region, including China”, said Mr Grande.

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“In Singapore we have dedicated resources on everything from portfolio management to investment support and information technology,” he said, adding that it was also a good location for recruiting.

Its Singapore office opened more than a decade ago and has 45 employees, handling all operational functions for the Asian region, including China, it said.

Created in the 1990s to invest Norway’s oil and gas revenues abroad, the fund is the world’s biggest single owner of equities. BLOOMBERG, REUTERS

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