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Australian pension funds avoid China over the impetus for Xi’s “common prosperity”

The Australian pension fund has withdrawn from China’s listed stock market, fearing that President Xi Jinping’s “common prosperity” policy increases the risk of government intervention in the private sector.

Senior pension executives fear that the government could destroy the entire sector “with a pen stroke” under a policy launched by Beijing last year aimed at achieving a more equitable distribution of wealth. I told the Financial Times that I was there. A tutoring, real estate and tech company that has wiped out billions of dollars from market value.

“We just felt it [with] The reforms have made the risk too high for direct play. “

The Australian pension group, which is integrated into a small number of megafunds, is becoming more active globally and its investment decisions are being carefully watched by the industry.

According to consultancy Willis Towers Watson, Australia’s total retirement savings pool has grown to A $ 3.5 trillion, making it the fifth largest in the world after the United States, Japan, the United Kingdom and Canada.

Until recently, UniSuper was one of the relatively few funds dedicated to China’s exposure, but Pearce said it had revoked China’s direct obligations.

“We just felt it [with] The reforms have made the risk too high for direct play, “he said.” So far, what does common prosperity mean? We’re going to put a belt on the tech and education industries. . Belting the real estate market. It’s getting pretty tough. “

He said it was unclear how the policy would be implemented and whether it focused solely on those industries. [and] Are you taking control of the corporate sector as a whole? ”

He said the fund still has a “pan-Asian mandate” with a Hong Kong manager who had some exposure to the stock market in mainland China.

China’s A-shares are stocks traded on one of the two major domestic exchanges in Shanghai and Shenzhen.

Robert Credaro, head of growth assets for Aware Super with A $ 150 billion in funding, said Xi’s decision to crack down on tutoring “surprised people.”

Aware had direct exposure to Chinese-listed stocks in proportion to the global market weight, but uncertainty meant that this could be reduced “just below” the market weight.

He said investing in A-shares will continue to benefit, but the funds are banking, insurance, telecommunications, technology and petrochemicals.

“Pen strokes have been reduced to zero in terms of value,” said Ian Patrick, chief investment officer of the A $ 230 billion Australian Retirement Trust. Let’s become.

He said this does not mean that investing in China is out of the question, but that additional risks require a decent benefit.

“In China, as an equity investor, and potentially as a fixed income and private debt investor, there is increasing risk to be reflected in forward returns,” he said. , Should I deploy that capital somewhere on a risk adjustment basis? “He said.

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