Australian pension funds are lowering exposure to Chinese listed equity markets due to worries that the country’s “common prosperity” drive has increased the risk of government interference in the private sector, reports the Financial Times. According to senior pension executives, under the policy, which was launched last year with the aim of distributing wealth in a more fair manner, entire sectors could be destroyed “with the stroke of a pen.”
They pointed to crackdowns on private tutoring, property and tech companies that had wiped billions of dollars off their market value. “We just felt that [with] the reforms that have taken place, it’s just become too risky as a direct play,” said John Pearce, chief investment officer of UniSuper, one of the country’s biggest superannuation funds with A$105 billion ($77.1 billion) under management.
Australia’s pension groups, which are consolidating into a handful of megafunds, are becoming more active globally and their investment decisions are being closely watched by the industry. Australia’s total retirement savings pool has grown to A$3.5 trillion, the fifth-largest in the world behind the US, Japan, the UK and Canada, according to consultancy Willis Towers Watson.