Principal Global Investors has laid off its head of Asia ex-Japan in a move that has surprised market observers and raised questions about the firm's commitment to the region, AsianInvestor can reveal.

Celestine Khoo

Celestine Khoo left the US fund house "effective today", after it made "the difficult decision" to eliminate the role, a spokeswoman said.

Kirk West, Sydney-based head of international (ex-US) business and clients, will assume leadership for the institutional sales teams and offices in the region, she added.

West, to whom Khoo had reported, had previously headed Asia out of Singapore for several years. His direct involvement in Asia underscores the importance of the market to Principal’s strategy, the spokeswoman said.

In addition to its 41 staff in Singapore and 12 in Sydney, the $700 billion fund house has branches in Beijing, Hong Kong, Tokyo, Kuala Lumpur, Bangkok, Jakarta.

The spokeswoman declined to comment on whether Principal was planning to cut any other senior staff in the region.

Khoo's regulatory licence with Principal in Hong Kong ended on October 17, show Securities and Futures Commission records.

Kirk West

She had taken up the Asia head role in July 2017, after joining the firm in early 2016 as chief executive of Southeast Asia. Before that, she worked at the Monetary Authority of Singapore for 17 years, including as head of external fund management.

Khoo listed her current position as "investor" on her LinkedIn profile, without giving more details. She did not respond to a request for comment sent via LinkedIn.

Principal is not the only Western asset manager to have moved oversight of Asia to its Australia office in recent years: Legg Mason is another example.

And Principal joins a growing list of fund houses to have made cuts in the region in recent years amid a tough environment. Others include Amundi, BlueBayEastspring, Legg Mason, State Street and Vanguard

SURPRISE MOVE

Certainly, Principal's move came as a surprise to some fund industry participants and sparked speculation about the asset manager's Asia business and the reason for the decision. 

The Hong Kong-based chief investment officer of one insurer questioned what it meant for the firm's commitment to, and future direction in the region.

And one Hong Kong-based fund industry veteran said on condition of anonymity: "Maybe they are not getting enough business to keep staff. No firm would let staff go if they had good volume."

The spokeswoman declined to comment on the speculation, apart from to "clarify that this is not a business strategy decision of Principal. It is purely an adjustment of the team structure in Asia."

This story has been updated to reflect that Vanguard retains oversight of Asia from Hong Kong.

Joe Marsh contributed to this story.