London — Some of the world’s biggest sovereign wealth funds and public pension funds are getting caught in the escalating tensions over technology between the United States and China, a Reuters analysis of their filings data and public disclosures show.
They range from Norway and Singapore’s giant sovereign wealth funds to Switzerland’s central bank and the $1.1 trillion U.S. TIAA, founded over a century ago by Andrew Carnegie as the Teachers Insurance and Annuity Association of America.
U.S. investors were banned from owning stakes in more than 40 Chinese firms viewed as having military links in a series of moves since November, as outgoing U.S. President Donald Trump sought to cement his hardline policy against Beijing.
That prompted TIAA unit Nuveen to sell stakes in blacklisted firms including China Telecom, China Mobile and China Unicom, as well as microchip giant SMIC, state oil firm CNOOC and phone and gadget maker Xiaomi.
Other U.S. public pension funds are expected to follow suit.
CalPERS, the largest such fund, held Hong Kong-listed ‘H’ shares in several firms, including a 1.1% stake in China Telecom and 0.2% apiece of both China Mobile and China Unicom, according to Refinitiv data. CalPERS, which has been criticised by Republican party politicians for its China investments, did not respond to a request for comment.
The Florida State Board of Administration, which manages $200 billion of assets and had small stakes in China Telecom, China Mobile and Xiaomi, according to Refinitiv data, told Reuters it would be adhering to the bans.
“The sanctions really bite for U.S. institutions,” said Elliot Hentov, head of policy research at State Street Global Advisors.
And the ripples aren’t only being felt in the United States.
A number of sovereign wealth funds (SWFs) have been affected as the New York Stock Exchange and index providers MSCI, S&P Dow Jones and FTSE Russell have ejected blacklisted firms from benchmarks, causing some stock prices to drop more than 20%.
Norway’s $1.3 trillion SWF, the world’s largest, has 0.2%-0.6% stakes in China Telecom, China Mobile, Xiaomi, CNOOC and China Unicom Hong Kong as part of a broader $35 billion Chinese equity portfolio, according to most recent disclosures running up until the start of 2020. It said it would not comment on specific holdings.
Singapore’s GIC, a self-described “independent state investor”, has a 10% stake in China Telecom’s Hong Kong-listed ‘H’ shares and holds roughly 1.4% of SMIC in mainland China A- and H-shares, Reuters calculations based on stock exchange filings show. GIC declined to comment.
Other holders are Canadian pension funds Caisse de Depot et Placement du Quebec (CDPQ), British Columbia Investment Management, CPP Investment Board, Netherlands-based independent pension fund PGGM Vermogensbeheer and APG Asset Management.
Non-U.S. investors are not formally required to make any changes and many will have seen the value of their Chinese investments soar in recent years.
Chinese equity markets are at a 13-year high and the market cap of the main tech index is double what it was two years ago.
“We view our investments in China – an important country in the global economy – with a long-term perspective,” CDPQ told Reuters, declining to comment on specific investments.
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