Breakingviews – Elliott’s Hong Kong Outing Reflects The Reality Of Asian Activists

HONG KONG (Reuters Breakingviews) – Hedge funds are valued for their ability to follow money. The 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 has far surpassed China and its offshore fundraising center. This is a good reason to concentrate resources where they may matter.

The 44-year-old fund headed by Paul Singer will manage its Asian investments from Tokyo and London in the future, Reuters reported citing sources. Elliott’s Hong Kong base had been headless since 2018 and the number of employees had fallen to 20 from around 40 when former boss James Smith returned to London that year with part of his senior squad.

In Hong Kong, Elliott is best known for an ongoing six-year campaign to shake up $ 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 helped generate more than $ 40 billion. dollars in asset sales. There have only been 17 public campaigns across China and Hong Kong. The number of Japanese has nearly tripled in five years while those in Greater China have fallen by a third.

China’s concentrated holdings and corporate culture that shuns criticism do not suit the generally public efforts of Elliott and other activists. The Hong Kong National Security Law has colored every conversation about staffing and locations in Asia since its inception. The fund manager’s exit will add to a longer-term debate about the value of maintaining regional hubs in the city, but it’s easy enough to justify it just in financial terms.