US government asks American college endowments to sell Chinese stocks, warning of ‘wholesale delisting’
- US State Department warns Chinese firms could face ‘wholesale delisting’ in letter to universities
- College endowments, mutual funds increased Chinese holdings in past year to track changes of A-share weightings in global indices
The US State Department has asked American colleges and universities to divest their holdings of Chinese companies from their more than US$600 billion in endowments, the latest move by the Trump administration to discourage pension funds and other American investment funds from buying stocks and bonds of firms from the mainland.
The agency warned in a letter on Tuesday that Chinese companies could face a “wholesale delisting” from American bourses by the end of next year under new rules recommended by a group of top US regulators, and it would be “prudent” for university endowments to exit their holdings in Chinese firms.
“The boards of your institution’s endowment funds have a moral obligation, and perhaps even a fiduciary duty, to ensure that your institution has clean investments and clean endowment funds,” Keith Krach, undersecretary for economic growth, energy and the environment, wrote in the letter seen by the South China Morning Post. “I also ask that you strongly consider publicly disclosing to your campus communities immediately all [People’s Republic of China] companies that your endowment funds are invested in, especially the PRC companies in emerging markets index funds.”
“Holding these stocks also runs the high risks associated with PRC companies having to restate financials,” Krach, the former chairman of Purdue University’s board of trustees.