BlackRock Inc., MSCI Inc. and other firms are bracing for tighter oversight following a congressional probe over investments in Chinese companies deemed to be national security threats and an executive order curtailing specific investments there.
More than 2,000 US mutual and exchange-traded funds — particularly those tracking indexes — have $294 billion invested across Chinese stocks and bonds, according to data compiled by Bloomberg, though not all of that money is invested in companies facing lawmakers’ scrutiny.
Last week’s order was narrower than expected, frustrating lawmakers who are pressing for tougher curbs on money flowing to Chinese firms. While the order applies mainly to private equity and venture capital firms, Congress may use the mandate as a springboard to grill money managers about investments in China.
The select committee on China alleges BlackRock has five funds with more than $429 million invested in Chinese companies acting against US interests. “BlackRock is one of many asset managers that provide exposure to emerging markets and the Chinese market specifically,” Rosenbluth said. “If this is something for Congress to be concerned about, it is not coming from one index provider and one asset manager — it is a broader industrywide event.”
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