As economic and diplomatic tensions between China and the West have risen, fund managers are treading more cautiously around the world’s second-largest economy
. In subtle but significant ways, most of the eight largest pension-fund investors in Canada – the “Maple Eight” – have tempered their appetites for risk in China.
“As a global investor, we do feel it’s important to have exposure in China,” John Graham, chief executive officer of theInvestment Board , said in a May interview. “It’s important to understand the biggest economies in the world. And the way to understand them is to spend time studying them and investing in them.”
“Are investors getting paid enough and is it a good enough risk-adjusted return?” Mr. Graham said. “Right now, we’re going through how we think about allocations to different asset classes in different countries around the world. And that’s exactly the question we’re asking ourselves right now, but I don’t have the answer.”
“We can come into public equities and get out, so more like rent as opposed to own China,” Mr. Emond said in a February interview. “There’s some sectors I wouldn’t get in even through public equities because they’re subject to tensions between the U.S. and China.” Ontario Teachers’ Pension Plan has 2.3 per cent of its $247-billion in assets in China but has reduced its investment activities in the country, including pausing new direct investments since January. British Columbia Investment Management Corp. has also paused, and has cut its exposure to China and Hong Kong by about 15 per cent over two years, to less than 5 per cent of its $233-billion portfolio.
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