World’s Largest Sovereign Wealth Fund Closes Shanghai Office
By CNN Hong Kong
Introduction
Norges Bank Investment Management (NBIM), the operator of the world’s largest sovereign wealth fund, has announced the closure of its office in Shanghai. This move reflects a growing trend of global companies scaling back their operations in China.
Background
- NBIM manages Norway’s $1.4 trillion government pension fund.
- It is the world’s biggest single investor in the stock market.
- As of the end of 2022, NBIM owned shares worth about $42 billion in 850 Chinese companies.
Office Closure
NBIM’s Shanghai office closure is driven by operational considerations and will not impact its investments or investment strategy in China. The office currently employs eight people, and the closing process will be conducted in an orderly manner, in line with local requirements.
Global Trend
This move by NBIM aligns with the trend of international investors diversifying their operations away from China due to increasing uncertainty in doing business in the country. Other notable examples include Ontario Teachers’ Pension Plan closing its China equity investment team and Forrester Research cutting its China analysts.
Challenges in China
China’s economy is facing challenges, including a deep slump in the real estate market, record unemployment among young people, and declining confidence in the nation’s future. Beijing’s crackdown on Western firms and the expansion of the espionage law have also unnerved foreign businesses.
Shifting Operations
NBIM’s Asia region’s operational functions will be shifted to its Singapore office, which has increasingly served as the hub for the entire Asian region. The Singapore office was opened in 2010, three years after the Shanghai office.
Financial Performance
In the first half of this year, NBIM reported a 10% return of $143 billion, driven by an AI-driven tech stock rally and a weaker Norwegian currency. However, the return was impacted by losses on unlisted real estate and renewable energy investments.
