Breakingviews – Elliott’s Hong Kong exit reflects reality for Asian activists
HONG KONG (Reuters Breakingviews) – Hedge funds are prized for their cold ability to follow money. US-based Elliott Management’s decision to shut down its Hong Kong office caused a stir in light of political tensions in the city, exacerbated by Beijing’s imposition of a sweeping national security law in July. Yet a wave of activists across Asia in recent years have largely passed through China and its offshore fundraising center. This is a good reason to concentrate resources where they can be important.
The 44-year-old fund headed by Paul Singer will direct its Asian investments from Tokyo and London in the future, Reuters reported citing sources. Elliott’s base in Hong Kong had been headless since 2018 and the number of employees had fallen to around 20, from around 40 when former boss James Smith returned to London that year with part of his team of direction.
In Hong Kong, Elliott is best known for an ongoing six-year campaign to shake up the $ 6 billion Bank of East Asia, a family lender whose shares have halved during that time. The fund declared a partial victory last year when the bank put a division up for sale, but the battle to extract value is still ongoing.
More importantly, the focus of activism in Asia has changed. There were 66 public activist campaigns in Japan last year, according to data provider Insightia, one of which was Elliott’s efforts to shake up tech conglomerate SoftBank, which has helped produce more than $ 40 billion. dollars in asset sales. There have only been 17 public campaigns across China and Hong Kong combined. The number of Japanese has almost tripled in five years while those of Greater China have fallen by a third.
China’s concentrated ownership and corporate culture that avoids criticism does not suit the generally public efforts of Elliott and other activists. Hong Kong’s National Security Law has colored every conversation about Asian personnel and locations since its inception. The fund manager’s exit will add to a longer-term debate about the value of keeping regional hubs in the city, but it’s easy enough to justify it in financial terms alone.
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