HONG KONG: Canada’s largest pension fund, CPP Investments, has laid off at least five investment professionals in its Hong Kong office as it pulls out of trading in China, three people familiar with the matter said.
Most of them are members of the fund’s private equity team and were notified early last month, two people said. There have been no reports of the departure so far.
He added that the managing director in charge of the company’s Greater China real estate portfolio had been told weeks ago that he would lose his job.
The fund, disappointed by the slowdown in China’s economic recovery and tensions with the West, has suspended new investments in China, including direct investments and investments in China-focused fund managers, according to people familiar with the matter. .
They were not authorized to speak to the media and refused to identify themselves.
CPP, which employs more than 150 people in its Asian base in Hong Kong, declined to comment.
In its latest annual report, the company said the developments in ties between Canada, the United States and China would cause it to reassess its approach to emerging markets.
Political tensions between Canada and China have been at considerable levels over the last few years. More generally, as trade and political tensions with the U.S. intensify, leading the U.S. government to impose export controls on key technologies such as some semiconductors, the world’s second-largest economy’s The business environment has also cooled.
U.S. Commerce Secretary Gina Raimond, during a visit to China this week, has complained that U.S. businesses have become unable to invest in China, pointing to fines, raids and other actions that endanger their businesses in China. pointed out.
Other Canadian pension funds have also pulled out of China.
The Ontario Teachers’ Pension Plan (OTPP) closed its Hong Kong-based China equity investment team in April, Reuters reported. The Quebec Deposit Management Fund (CDPQ), Canada’s second-largest pension fund, will also suspend private transactions in China and close its Shanghai office this year, the Financial Times reported in June.
China accounts for 9.8% of CPP’s total investment, according to CPP senior managing director Michel Leduc, who spoke at a parliamentary committee examining Canada-China relations in May.
At the time, he said China was an “important source of supply” for CPP’s portfolio. CPP managed $575 billion in assets globally as of the end of June.
China-focused private equity funds raised just $11.6 billion this year. That equates to $74 billion raised in 2022 as a whole, according to data from research firm Preqin.
That figure is far from the peak in 2016, when more than 1,500 China-focused funds raised about $300 billion.
Private equity acquisitions of Chinese companies so far this year have been valued at $3.2 billion. That’s up from $2.7 billion last year, but still well below the $49 billion in 2021, according to Dealogic data.