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| US public pensions being invested in China post-Covid-19? Getouttahere! |
The unsurprising answer from the Trump administration is, "@#$% no!" A few months ago, it was decided that more US public pensions would be invested abroad for "portfolio diversification" reasons. More specifically, this investment would track the MSCI All Country World Index. Curiously, the world's second largest economy, China, was only very recently included in this "World Index." The PRC's share of the MSCI gauge has steadily increased since its May 31, 2018 inclusion.
Now, let's put two and two together: US public fund managers were scheduled to begin buying foreign stocks--including an ever-increasing amount of PRC equities whose weighting was increasing in the MSCI index--just as Trump's blame game on China for everything that has gone wrong with the world since COVID-19's emergence intensified. When Trump caught wind of the imminent public pensions investment in Chinese stocks, he's [surprise!] tried to scotch the proceedings:
The Thrift Savings Plan (TSP) – the federal government’s retirement savings fund – is scheduled to transfer roughly US$50 billion of its international fund to mirror an MSCI All Country World Index, which captures emerging markets, including China. The Federal Retirement Thrift Investment Board (FRTIB) overseeing the fund made a decision in 2017 that the money should be moved by mid-2020. Opponents of the transfer in recent weeks have engaged in a last-minute effort to stop it [...]
Senator Marco Rubio, a Florida Republican, applauded reports of the move in a statement Thursday. “It’s outrageous that five unelected bureaucrats appointed by the previous administration have ignored bipartisan calls from Congress to reverse this short-sighted decision, and I applaud President Trump for directing his administration to take swift action preventing this from going forward,” he said.
Now, the Washington Post reports that assorted China bashers began alerting Trump administration figures to this process:
Roger Robinson, who served on the National Security Council under President Ronald Reagan, said he began meeting with top White House officials last summer to alert them that the Thrift Savings Plan’s new investment strategy could be seen as undercutting national security by subsidizing Chinese companies involved in weapons manufacturing and other interests detrimental to the United States. “The Thrift Savings Plan issue is a microcosm of the broader problems of U.S.-sanctioned Chinese companies and other corporate bad actors in our capital markets and Beijing’s noncompliance with federal securities laws,” said Robinson [...]
In response, Trump intends to appoint China-phobes to the said board and scotch the MSCI investments--especially since its index contains [heaven forbid!] PRC-listed stocks:
Trump on Monday nominated three members to replace the majority on the Federal Retirement Thrift Investment Board, made up of five investment experts who oversee the retirement plan. All of their four-year terms have expired, and Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Nancy Pelosi (D-Calif.) have not replaced those serving in the two seats they control.
With its new nominees, the White House is taking steps to block the plan’s $40 billion international fund from investing in a fund that contains about 11 percent of China-based stocks, according to people familiar with the strategy. “Obviously, the president doesn’t want this investment to take place and is looking for other alternatives,” said a senior administration official who was not authorized to speak about the nominations. “These individuals will be key to making that happen.”
