Matthews shuts Shanghai office as it joins asset managers Vanguard and Van Eck in retreating from China

Asset manager Matthews International Capital Management is closing its Shanghai office, adding to the list of global firms that have cut back in mainland China.

The San Francisco-based company will centralise its regional research business in Hong Kong and remains committed to conducting China analysis, it said in an emailed statement on Friday.

The firm had fewer than 10 people in the Shanghai office focusing mostly on research about the mainland stock market and opportunities for expansion, a person familiar with the matter said. Some of the people were offered the chance to relocate to Hong Kong, the person said, asking not to be named because the information is private. A spokesperson for Matthews declined to comment on the details.

Matthews joins Vanguard Group and Van Eck Associates in pulling back from mainland China in recent years, even as other global firms led by BlackRock step up efforts to tap the growth potential of the 127 trillion yuan (US$17.7 trillion) asset management market. Aside from stock-market declines that are hurting investment returns, regulators are tightening scrutiny of the private fund management industry and cutting fees for mutual funds, adding to challenges for money managers.

Asset managers’ views on China are diverging as they navigate an increasingly challenging market. Goldman Sachs’ chief investment officer for its wealth management business said this month that “one should not invest in China” partly due to expectations for a steady economic slowdown in the next decade. JPMorgan Chase, however, said on Friday that the country “remains an irreplaceable growth market.”