HONG KONG, March 9 (Reuters) - U.S. asset manager

Matthews International Capital Management is closing its

Shanghai office, a company statement and a source with direct

knowledge said, the latest withdrawal of a foreign money manager

amid difficult market conditions.

Other major global financial institutions, such as Morgan

Stanley ( MS ), have trimmed their teams, as the blue-chip

CSI300 index sank last month to five-year lows,

pummelled by a property debt crisis and lack of major stimulus.

"Matthews can confirm it made the decision to close its

Shanghai office and consolidate its research capabilities within

the existing Hong Kong office," the San Francisco-based firm

said on Friday.

But it would stay strongly committed to in-depth fundamental

research in China, it added in the statement, while continuing

to deliver high-quality client service in Asia.

A source familiar with the matter said the decision was a

cost-cutting measure and the firm had fewer than 10 people,

mainly market researchers, in the Shanghai office.

The source sought anonymity as he was not authorised to

speak to media.

Matthews' flagship China Fund has lost 22.4% over the past

year through Feb. 29, underperforming a retreat of 14% by the

MSCI China Index, data on its website shows.

Bloomberg first reported the move by Matthews on Friday.

The pull-out joins a roster of exits over the past few years

in the face of challenges such as a depressed domestic capital

market, policy uncertainty and geopolitical tension.

Last October, U.S. mutual fund giant Vanguard Group sold its

stake of 49% in a joint venture with Chinese fintech giant Ant

Group, after six years in the country.

A few months earlier, smaller American money manager Van Eck

also terminated a plan to set up a Chinese mutual fund unit

because of business uncertainties.