Reuters :
Just a few years ago, lucrative business prospects in China on the back of a booming economy led to a scramble among Western financial firms, from investment banking to asset management, to expand their footprints and source talent from across the world.
But as doubts grow about China’s economic recovery and its markets lag global peers, many of the financial firms are taking a hit on their earnings and are reining in their ambitions for what was a key piece of their global growth strategy.
From the beginning of this year, a growing list of Western financial firms, including Fidelity International Ltd (FIL), Morgan Stanley, and Legal & General have either sharply cut China-focused jobs or have shelved expansion plans.
More companies are expected to follow suit soon as a tepid deals pipeline and lacklustre asset generation weigh on expenses and revenues, according to senior executives at foreign financial firms, headhunters, and analysts.
The souring of the China allure for Western financial firms comes at a time when Beijing has been ramping up efforts to lure more foreign capital to revive the domestic economy amid persisting geopolitical tensions.
Fund company FIL, which is cutting 16 percent of its 120-strong China team, for example, expects its loss in the country to widen to $45 million this year from last year’s $41 million, according to an internal document seen by Reuters.
The headcount plan of FIL has been “significantly reduced” for the next four to five years compared to the business plan formulated in 2022, said the document, circulated internally earlier this year.
