Canadian pension fund CDPQ puts brakes on China investment – FT

(Reuters) -Canada’s second-largest pension fund Caisse de dépôt et placement du Québec (CDPQ) has stopped making private deals in China and will close its Shanghai office this year, the Financial Times reported on Thursday, citing people familiar with the matter.

The news follows a May 8 parliamentary hearing in which several Canadian pensions, including CDPQ, were asked about their relationship with China as bilateral political tensions have intensified.

CDPQ is leading its regional investment efforts from Singapore, the report said, noting that it still has business interests in China.

“We paused private investments for some time already — and have focused on liquid markets, which is the majority of our two per cent total portfolio exposure to China. We expect this trend to continue,” the newspaper quoted CDPQ as saying in a statement.

CDPQ confirmed the Shanghai office closure later this year, but declined to comment further.

The Financial Times in February reported that Singapore’s sovereign wealth fund GIC has reduced private investments in China.

During the May hearing, Michel Leduc, a senior manager at the Canada Pension Plan Investment Board (CPPIB), said China was an “important source” for its portfolio.

“We recognize that any investment in China needs to be handled with care, sophistication, and an acute understanding of the current political and geopolitical environment,” Leduc said.

A CPPIB spokesperson declined to comment further on Thursday.

In May, Canada’s C$211.1 billion ($157.87 billion) British Columbia Investment Management Corporation (BCI) said it had reduced exposure in China and Hong Kong by about 15% over two years and paused direct investments in China.

“Our current exposure in China is less than 5% of the overall BCI portfolio, the majority of which is through public markets and via indexed funds,” the asset manager said.

In April Canada’s third largest pension fund, Ontario Teachers’ Pension Plan (OTPP), also closed its China public equity investment team based in Hong Kong.

At the start of the year, OTPP said it was pausing future direct investments in private assets in China, citing geopolitical risk as a factor.

OTPP expects to name a new head of Asia-Pacific Private Capital Direct in the coming months to replace Raju Ruparelia who has left to pursue other opportunities, a spokesperson said by email.

($1 = 1.3372 Canadian dollars)