World News

Western Financial Firms Slash Operations In China As Concerns About Country’s Lagging Economy Grow

Western financial firms are cutting their operations in China as the country’s economy fails to show significant signs of improvement, weighing on companies’ profits, Reuters reported Monday.

Fidelity International Ltd., Morgan Stanley and Legal & General are among the financial firms that have either suspended plans for expansion or cut jobs focused on the region since the beginning of the year, with Goldman Sachs, JPMorgan Chase & Co. and Citigroup cutting investment banking jobs focused on China in the last year, according to Reuters. China’s economy failed to pick up steam in 2023, growing only 5.2% for the year, lower than the 6% rate that was normal prior to 2020, as the effects of years-long COVID-19 lockdown policies continue to take their toll.

“As the outlook for the Chinese stock market and economy remain sluggish, [foreign] firms will inevitably take steps to streamline their businesses especially since most would have gone through a hiring spree in earlier years,” Yoon Ng, Global Asset Management Advisory Principle at financial technology company Broadridge, told Reuters.

Amid poor projections of future economic growth, foreign investors pulled billions from China and Hong Kong in 2023. The Institute of Internal Finance estimated at the end of last year that around $65 billion would exit the Chinese financial system in 2024.

While financial firms are limiting their operations in the country in the short term, most are not pulling out completely in hopes that China will be able to economically recover, according to Reuters. More companies are expected to shrink operations in the country as poor earnings and a lack of deals continue to weigh on profits.

“We are hearing some more investment banks and securities firms in Hong Kong [are] already looking at staff scale reduction,” Sid Sibal, vice president of Greater China at recruitment firm Hudson, told Reuters.

The People’s Bank of China has announced a number of measures to boost the country’s struggling economy, including facilitating credit to struggling sectors while lowering interest rates and loosening capital requirements for banks.

The amount of money for both onshore and offshore initial public offerings for Chinese companies has dropped 80% in the first quarter year-over-year, according to Reuters. In that same time, the value of merger and acquisition deals involving China dropped by 36%.

Adding to China’s economic woes is a slump in the country’s real estate market, which continued its downward spiral in March with home values dropping 2.7% year-over-year, according to Business Insider. Commercial developers are also heavily in debt, with one of China’s top developers being ordered to be liquidated in January after it was unable to create a restructuring plan.

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org

Will Kessler

Share
Published by
Will Kessler
Tags: China

Recent Posts

US EV Industry Shifts Back Into Reality Gear

At the start of each year, I write a piece in which I make a…

4 hours ago

Home Prices Under Biden Just Hit A New Milestone

Home prices hit a record high in May despite falling demand and sales activity, The…

4 hours ago

Trump Pulling Close To Even In Blue State That Hasn’t Voted Republican In Half A Century

Former President Donald Trump is closing in on President Joe Biden in Minnesota, a state…

5 hours ago

Republicans Outpace Dems In Fundraising As Control Of Key Legislatures Hangs In Balance

Republican campaign committees tasked with electing conservatives to state legislatures hold a significant fundraising advantage…

5 hours ago

Our Debater-In-Chief Takes A Week Off To Learn How Great His Presidency Has Been

If the current reports are correct, the dunce in the White House is going to…

5 hours ago