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China strategy untouched in Blackrock job cuts

The firm said in an internal memo last week that it will be laying off 500 employees globally, accounting for 3% of its total workforce.

“After several years of meaningful headcount growth, we are making some changes this week to the size and shape of our workforce. The changes we are making now will help us continue to invest in our most important strategic growth opportunities for the future,” the Blackrock memo said.

More specifically, the firm will remain focused on areas including the investment needs of clients in areas such as retirement, illiquid alternatives, ETFs and factor investing, technology and expanding distribution capabilities in high-growth markets.

China and APAC unaffected

The memo did not say which businesses would be affected. However, a Hong Kong-based spokeswoman for the firm said the job cuts will not affect its onshore China business.

In China, Blackrock employs a “dual track” strategy, in which it has both licences for private fund management (PFM) and qualified domestic limited partner (QDLP).

The PFM licence allows foreign fund houses to invest in a portfolio of onshore assets and permits the product’s sale to a maximum of 200 domestic qualified investors. The QDLP licence allows international asset managers to raise money domestically to invest in offshore traditional and alternative investments.

Outside China, the job cuts will also have no impact on Blackrock’s portfolio management team in Asia-Pacific, the spokeswoman added.

“The firm continues to perceive APAC as a dynamic region for growth, and we are continuing to invest in the business,” she said. “Our strategic priorities for the region remain unchanged.”

However, a source with knowledge of the matter said some jobs may be affected in Asia-Pacific.

Not a short-term move

The spokeswoman noted that the firm’s move to cut jobs globally is not a short-term one, highlighting the continued growth of its iShares business.

Last year, iShares saw net inflows of $168bn globally, accounting for 33% of the ETF industry’s net flows of $515bn, according to a separate statement.

In Asia-Pacific, the iShares business grew by 18% in 2018, with client holdings of at least $118bn. Across the region, institutional investors, such as pension funds and family offices, represent the largest and fastest-growing investor segments in ETFs, it said.

The firm’s total AUM as at the end of 2018 stood at $5.97trn, slightly lower than the $6.2trn level in 2017, according to the firm’s fourth quarterly report.

New global appointment

Separately, Blackrock has also appointed Mark Wiedman to the newly-created role of head of international and corporate strategy, effective immediately. He reports to Larry Fink, the firm’s CEO. Wiedman was previously global head of iShares and index investments, and continues to be a member of the firm’s global executive committee.

“APAC and EMEA are both key growth markets for the firm, and we see value in unifying our focus on these international markets and adding additional executive focus and attention to them,” the firm said.

It also believes there is a need “to be local in every market” in which it operates, and it will continue to run the business accordingly. Hence, Geraldine Buckingham and Rachel Lord will continue to lead the APAC and EMEA businesses respectively. They will also continue to report to Fink, with joint reporting to Wiedman going forward.

Part of the Mark Allen Group.