Chinese stocks pose reputational risk to US, Canadian pension funds amid geopolitical tensions, says Alpine Macro strategist

Name: China surprises market by keeping mortgage rate unchanged amid ongoing property crisis
Uploaded: 2023-09-26T12:00:16.000Z
Duration: 2 min 9 s
Description: China surprises market by keeping mortgage rate unchanged amid ongoing property crisis

Money managers trying to convince their boards to invest in Chinese assets worry about being seen to be aligning with a hostile government, says research firm

Earlier this month Canada’s biggest pension fund trimmed staff in its Hong Kong office and paused new investments in China, according to Reuters

Reading Time:2 minutes

Why you can trust SCMP

Money managers are reducing their exposure to China and using any market rallies as an opportunity to sell, says Alpine Macro strategist. Photo: Reuters

Jiaxing Li

Published: 8:00pm, 26 Sep 2023

Chinese stocks are becoming a reputational hazard for US and Canadian pension funds because of geopolitical risks, a strategist said.

Money managers are having a hard time convincing their boards to invest in Chinese assets even if they see long-term potential, as they worry about being seen to be aligning with a hostile government, according to Alpine Macro, a Montreal-based research firm.

As a result, they are reducing their exposure to the country and use any market rallies as an opportunity to sell, it said.

“This kind of selling is not motivated by economic and financial considerations, but by political and geopolitical factors,” said Yan Wang, chief strategist for emerging markets and China, in a podcast presentation to clients. “We can argue that this selling doesn’t really make economic sense, but the market will just face this kind of continuous headwind until the selling pressure is exhausted.”

The underwhelming market performance, a struggling economy and rising geopolitical tensions have prompted some of the biggest pension funds in the world to wind down their China investments.

02:09

China surprises market by keeping mortgage rate unchanged amid ongoing property crisis

The MSCI China Index, which tracks over 700 Chinese companies listed at home and abroad, has tumbled 9.5 per cent so far this year to trade near an 11-month low, wiping out market capitalisation of US$100 billion along the way.