Danish Doctors’ Pension Fund Divests Chinese Assets Amid Trade Tensions
Lægernes Pension, Denmark’s doctors’ pension fund, is divesting all Chinese assets valued at approximately DKK1.5 billion (€201 million) due to increased risks associated with investments in China amid trade tensions and structural economic challenges. This decision also reflects a growing cautious stance among European pension funds regarding investments in China.
Lægernes Pension, the Danish pension fund for doctors, announced its decision to divest all Chinese assets, totaling approximately DKK1.5 billion (€201 million). This move is primarily attributed to risk-return considerations and escalating trade tensions. The fund emphasized that the sale resulted from a growing imbalance between the potential returns and inherent risks of investments in the Chinese market.
The fund cited several structural challenges within the Chinese economy impacting its investment appeal. Notable concerns include a significant decline in the workforce, elevated levels of private debt, and turmoil within the property sector. Additionally, geopolitical tensions have heightened unpredictability surrounding investments in China, a factor that the fund deemed unacceptable for risk management.
The divestment will initially affect listed investments, which encompass assets related to Macau and Hong Kong, with plans to halt any future unlisted Chinese investments. Lægernes Pension maintained a strategy of investing globally to optimize returns, indicating prior foresight when it divested DKK1 billion in assets in Russia before the onset of the conflict in Ukraine in 2022.
Other Danish pension firms have taken similar actions, reflecting a broader trend among European pension funds. In December, Sampension divested DKK161 million in shares of PDD Holdings due to consumer protection concerns. Additionally, Denmark’s P+ fund sold stakes in ten Chinese companies over apprehensions regarding forced labor related to solar cell production. Such steps illustrate a growing wariness among pension funds regarding investments in China amid increasing economic uncertainty.
In conclusion, Lægernes Pension’s divestment of Chinese assets highlights a significant shift in investment strategy driven by risk-return assessments and geopolitical tensions. This decision is part of a larger trend among Danish and European pension funds reacting to the changing economic landscape of China. By prioritizing risk management and making proactive divestments, these funds aim to shield their portfolios from potential instability and adverse market conditions.
Original Source: www.ipe.com
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