CDPQ to suspend private investments in China

Caisse de Depot et Placement du Quebec, Montreal, has suspended making private investments in China and will shut down its office in Shanghai.

“We paused private investments for some time already and have focused on liquid markets, which is the majority of our 2% total portfolio exposure to China,” a spokesman for CDPQ said in an email Thursday. “We expect this trend to continue.”

The spokesman added that the Canadian pension fund will close its office in Shanghai “later this year” and that CDPQ has no other offices in mainland China or in Hong Kong.

Two other Canadian pension funds, the C$247.2 billion ($183.1 billion) Ontario Teachers’ Pension Plan, Toronto, and the C$215 billion British Columbia Investment Management Corp., Victoria, have taken similar steps with respect to Chinese investments.

At the May 8 meeting of the House of Commons Special Committee on the Canada-People’s Republic of China Relationship, Stephen McLennan, executive managing director of OTPP, said China investments accounted for 2.3% of the pension fund’s assets and that OTPP will pause further private investments in the world’s second-biggest economy.

Mr. McLennan cited, among other reasons, “recent regulatory changes in China, and the continued deterioration of U.S.-China and Canada-China relations,” for the decision, according to minutes from the meeting.

Similarly, Daniel Garant, executive vice president and global head-public markets at BCI, told the committee that BCI will make a similar pause in Chinese investments.

At that May 8 meeting, Vincent Delisle, senior vice-president and head of liquid markets at CDPQ, explained to the committee why the pension fund had investments in China. “We see China as a market that contributes to our diversification and long-term performance of our depositors, while its weight in global GDP is already close to 20%,” he told the committee at the time. “The Chinese economy has generated a quarter of global growth in the last 10 years.”

Mr. Delisle added: “In our investments around the world, including in the People’s Republic of China, we respect all Canadian sanctions in all circumstances.”

As of Dec. 31, CDPQ has net assets of C$402 billion.