Vanguard to close Hong Kong, Japan operations

SHANGHAI (Reuters) – U.S. asset manager Vanguard Group said on Wednesday it will close its operations in Hong Kong and Japan and exit Hong Kong exchange-traded funds, citing unsupportive “industry dynamics”.

The fund giant, with about $5 trillion in assets, said in a statement that its Hong Kong business primarily served institutional clients and not retail investors, which are its primary focus.

It said the exit would happen gradually and take between 6 months to two years.

Vanguard, which launched a wholly foreign-owned enterprise (WFOE) in China in May 2017, said it will “gradually cease (its) onshore presence in Hong Kong and make an orderly exit” from its Hong Kong ETF, Mandatory Provident Fund and Index-Tracking Investment Schemes businesses.

Hong Kong is home to Vanguard’s Asian headquarters. The index fund giant closed its Singapore operation in 2018.

In a separate statement, a spokesman confirmed that Vanguard would also close in Japan, and shift its primary office in Asia to Shanghai.

“Our future focus in Asia is on Mainland China,” the spokesman said in an email.

Vanguard’s closure plans were first reported on Wednesday by Ignites Asia, a Financial Times service.

Vanguard announced a China advisory joint venture in December 2019 with China’s leading fintech company, now known as Ant Group, to provide retail investment advisory services.

Ant, an affiliate of Alibaba Group Holding Ltd, is currently seeking a $200 billion dual listing in Hong Kong and Shanghai and operates Yu’ebao, one of the world’s largest money market funds.

(Reporting by Samuel Shen and Andrew Galbraith in Shanghai, Cheng Leng in Beijing; editing by David Goodman and Jason Neely)