Canadian pensions retreat from China
Caisse de depot et placement du Quebec (CDPQ) is the latest investor identified as part of an apparently sweeping reduction of Canadian pension fund exposure to China.
CDPQ has confirmed it will close its Shanghai office and stopped making private investments in China, according to The Financial Times, which cited a statement from the firm.
“We paused private investments for some time already — and have focused on liquid markets, which is the majority of our two per cent total portfolio exposure to China. We expect this trend to continue,” CDPQ was quoted as saying.
It comes amidst similar moves by British Columbia Investment Management Corporation (BCI) and Ontario Teachers' Pension Plan (OTPP), which both confirmed during a Canadian parliamentary committee in May that they had suspended direct investment into mainland China. Last month, it was reported OTPP had shut down its Hong Kong equities team.
The activity is viewed as part of a long-unfolding decoupling driven by bilateral tensions, although the trend appears to have intensified since the parliamentary committee in May. The hearing focused on Canada-China relations and the national security implications in cross-border investment.
CDPQ was one of several Canadian pension plans that spoke at the committee, emphasising its limited exposure to China and a commitment to minimising political risk while upholding environmental, social, and governance (ESG) standards.
“In China, we need to consider not only our national exposure, but also the major American or European multinationals that do business there. Domicile is an important consideration for us, but the process to which we are subject is even more so,” Vincent Delisle, head of liquid Markets at CDPQ, told the committee.
“We're talking about China today, but virtually any company included in our portfolio is subject to the same criteria. Whether these are ESG indicators or other criteria, we assess the risks.”
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