Norway's wealth fund to close China office

The Norwegian fund has cited concerns about rising tensions between the United States and China as the biggest geopolitical risk that it is facing. On Thursday, though, it said the closure of its Shanghai office was "an operational decision".

Norway's $1.4 trillion sovereign wealth fund, one of the world's biggest investors, is closing its only office in China, it said on Thursday, though it will continue to invest in the country. A number of financial firms are reviewing their presence in China in light of a tightening of regulatory oversight there and deteriorating political relations between Beijing and the West.

In April, Ontario Teachers' fund, Canada's third-largest pension fund, closed down its China equity investment team. The Norwegian fund has cited concerns about rising tensions between the United States and China as the biggest geopolitical risk that it is facing.

On Thursday, though, it said the closure of its Shanghai office was "an operational decision". "Our investments remain unchanged. We use a combination of internal expertise and external managers to invest in China and will continue to do so," Deputy CEO Trond Grande told Reuters.

The fund held some $42 billion across 850 Chinese and Hong Kong companies at the end of 2022, down from a peak of $47 billion in 2020, according to fund data. It had eight employees at its Shanghai office, which opened in 2007 and where staff reacted angrily to Thursday's announcement, according to a Reuters witness.

Grande said the fund would ensure the closure was conducted "in an orderly manner" for those affected and "in line with local requirements and procedures". GEOPOLITICAL RISK

The fund did not reply to a question as to whether China-U.S. tensions or cybersecurity issues played a part in the decision to close the Shanghai office. Grande told Reuters in August after the fund's half-year results that its biggest worry geopolitically "is a world where the two superpowers are increasingly in competition with each other and hence creating a decoupled (world economy)."

In March, the Norwegian central bank, which includes the fund, banned its employees from using Chinese-owned TikTok after receiving advice from Norway's intelligence agencies over security issues. Among operational reasons driving Thursday's move, the fund said, is that its Singapore office "has demonstrated that it can serve as a hub for the entire region, including China", said Grande.

"In Singapore we have dedicated resources on everything from portfolio management to investment support and IT," he said, adding that it was also a good location for recruiting. ($1 = 10.7235 Norwegian crowns)