The Blubber

Per CNBC

Vanguard will exit China's $3.92 trillion funds market by severing its joint venture with Ant Group. Familiar sources said that the group would close its main office in Shanghai.

The decision will come after having six years of presence in China, considered the world's second-largest economy, and two years after the firm said it wouldn't continue to set up a fund management unit. Instead of expansion, the exit would be a decision in the opposite direction.

Vanguard owns a 49% stake in JV, which was controlled by Ant. Ant said that JV would continue to operate as usual. Ant is considering buying Vanguard's stake after being notified of a potential exit.

Vanguard manages $7.1 trillion in assets globally, and its supposed decision to exit comes in contrast to Blackrock and Fidelity's plans to expand in China. Per two sources, the closure of the firm's Shanghai main office would mean the layoff of its staff there.

So far, Vanguard has incurred a loss in 2021, higher than its internal forecast after the company's first setup in 2019, per SCMP. Two years ago, Vanguard filed for a mutual-fund management license in the country.

Some markets in China remain to be strong, like its EV market, which saw 5x more sold in 2022 compared to the US market. The country reportedly sold 5.67 million EVs and plug-in hybrids, and the country expects its total car market to increase by 1%.

However, in October, it was reported that home sales in China dropped by 37.7% year-over-year, with the most being Hangzhou seeing an 80% YOY decline. During the report, Beijing followed with a 64% drop, Shenzhen with a 49% drop, and Shanghai with a 47% drop.

Upon the drops, Beijing decided to ramp up efforts to distress markets by easing mortgage rate floors.

See flow at unusualwhales.com/flow.

Other News:

• China Sold 5X More EVs Compared to the US in 2022
• New Home Sales in China Dropped by 37.7% YOY, with Hangzhou Dropping the Most at 80%

Resources:

CNBC

South China Morning Post