Hedge fund Elliott Management to shift operations to London and Tokyo as it closes its HK office

21-Jan-2021 Intellasia | South China Morning Post | 6:02 AM Print This Post

Paul Singer’s Elliott Management plans to close its Hong Kong office and shift its remaining staff to Tokyo and London, as the downsizing by one of the biggest foreign financial firms amid the city’s worst recession culminates in its exit.

The US hedge fund has been winding down its operations in the city for several years and stopped investment activities in Hong Kong at the beginning of the year, according to people familiar with the matter, who were not authorised to discuss the matter publicly. Its Hong Kong operation was reduced from a staff of about 40 in 2019 to fewer than 20 employees, at Chater House in the Central business district, the same building as JPMorgan Chase.

James Smith, then head of Elliott’s Hong Kong office, moved to London in 2018 and left the firm the next year. Since his departure, Elliott’s activist campaigns in Asia have primarily been run out of London and Tokyo, one of the people said.

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The exit was not driven by the months of anti-government protests that broke out in the city in 2019 or the passage of China’s controversial national security law last year, one of the people said. The hedge fund has had a presence in Hong Kong since 2005.

Elliott’s overall approach to investing in Asia remains unchanged as a result of the change, one of the people said. The fund has primarily focused on Asian markets outside mainland China, which are more familiar with activist investors.

The hedge fund has been carrying out several activist campaigns in Asia in recent years, including seeking changes at Bank of East Asia, Hyundai Motor Company, SoftBank Group and Unizo Holdings.

In September, the Bank of East Asia (BEA) said it would sell its life insurance business following a strategic review prompted by a long-running shareholder battle with Elliott.

BEA put a five-year legal battle with Elliott on hold last March after it agreed to the strategic review. Elliott supported the review and agreed to stay its legal action at the time.

Founded in 1977, Elliott had about $41 billion in assets under management at the end of June.

The departure of Elliott comes as some have questioned whether Hong Kong will retain its crown as bastion for international finance after a period of unprecedented political instability and economic strife due to months of protests followed by the coronavirus pandemic. The city also has found itself caught in the middle of heightened tensions between Washington and Beijing under outgoing US President Donald Trump.

In August, nearly four out of 10 members surveyed by the American Chamber of Commerce said they were considering relocating after Beijing adopted the national security law for Hong Kong. Critics claim the law stifles freedoms in the city.

That same month, Vanguard, the world’s second-biggest asset manager after BlackRock, said it planned to close its Hong Kong office and exit its exchange-traded fund business in the city following an “extensive review” of its international operations. It moved its primary regional office to Shanghai.

Demand for prime office space by financial firms in the city also is expected to decline as HSBC, Standard Chartered and other employees adopt more flexible working arrangements after successfully working from home for months during the pandemic.

However, Guo Shuqing, chair of the China Banking and Insurance Regulatory Commission (CBIRC), said the city has an “indispensable” role to play for the mainland economy, including its efforts to internationalise the yuan and develop the Greater Bay Area.

“Hong Kong is vital to China’s new development pattern of dual circulation,” Guo said in a speech at the Asian Financial Forum on Monday. “Hong Kong connects China’s domestic and international circulations.”



Category: Hong Kong

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