SIMRAN VASWANI, DealStreetAsia, 8/3/23
HONG KONG — California State Teachers Retirement System (CalSTRS), the second-largest pension fund in the U.S., has been continuously decreasing its exposure to China, following several of its counterparts, amid exacerbating geopolitical tensions.
According to the pension fund’s latest report, China fell off its list of top 10 countries where CalSTRS has its highest market value and revenue exposures as of May 31.
The nation used to rank fourth and account for 2.1% of the pension fund’s asset exposure at the end of December 2020. Two years later, exposure dropped to 1% and its ranking fell to sixth.
CalSTRS is not the only pension fund that has been pulling back from the world’s second-largest economy.
Ontario Teachers Pension Plan reportedly closed down its China equity investment team based in Hong Kong earlier this year. It also paused directly investing in private assets in the country.
Caisse de depot et placement du Quebec halted private dealmaking in China and said it would close its Shanghai office later this year. Its real estate unit, Ivanhoe Cambridge, also announced the closing of its Shanghai office.
In Asia, CalSTRS’s largest exposure has been in Japan, which is its second-largest overall, per the disclosure. India and South Korea occupy the ninth and tenth positions respectively, each comprising 0.6% of its asset exposure.
Chinese stocks ended last month on a better note on hopes of government support measures and stimulus after the second quarter’s gross domestic product growth fell short of projections. The country’s private markets, however, are facing a tough time with strained fundraising efforts from macroeconomic uncertainties and the additional pressure of dampened U.S. investor interest due to geopolitical tensions.
CalSTRS is the largest educator-only pension fund in the world with assets totaling approximately $315.6 billion as of June this year, according to its website. Its exposure to private equity counts for just over 15% of total assets.
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