US investment management company Vanguard has decided to close Hong Kong office and change its focus to mainland China. The decision came after a strategic review the company conducted.
Vanguard will exit the ETF business in Hong Kong and redirect its capital towards a more strategically aligned region, an exchange filling stated. The company is currently seeking options for a clean withdrawal including appointing an investment manager for each fund that is going to be delisted.
A spokesman for the company confirmed the move and said will happen over a period of six month to 24 months. He also stated that the company’s “future focus in Asia is on mainland China”. Vanguard’s primary offices will be switched to Shanghai. The company will also close its offices in Japan.
Vanguard is not the only company to turn away from Hong Kong and shift to mainland China. Japan’s Daiwa Securities recently also shared a desire to redirect its operations away from Hong Kong.
Keiko Tashiro, deputy president at Daiwa commented:
If facts emerge such as people getting arrested one after another, we may need to front-load it. Once the joint venture is established, we can do China business in China.
Vanguard’s spokesperson added said
Unfortunately, from a distribution business standpoint, the current industry dynamics are better suited to institutional investors and do not currently support the scale needed for [retail investors]. Should these dynamics change longer-term, we cannot rule out the possibility of resuming services more aligned with our strategic priorities at a future date.
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