LONDON (Reuters) – (This April 16 story has been corrected to say ‘strategic asset allocation,’ not ‘foreign equities,’ in paragraph 1, and adds to say that the changes apply to GPIF’s strategic asset allocation, not its passive funds, in paragraphs 3 and 5 ) Japan’s Government Pension Investment Fund (GPIF) has switched the benchmark it uses for the strategic asset allocation of its $1.7 trillion of investments to one that does not include onshore Chinese shares, it said in a recent update.
Some global investors have become nervous about owning domestic Chinese shares, known as A-shares, given global trade tensions and China’s domestic economic challenges.
GPIF said China-A shares had until recently been part of its policy asset mix, but made up a small proportion of its investments.
GPIF previously used MSCI’s All Country World Index (ex-Japan) as a benchmark for these investments in foreign equities, but it will use that benchmark while excluding China A shares for the five years from 2025, it said.
GPIF’s passive funds, which represent the bulk of investments, had excluded China-A shares from its benchmarking previously.
The exclusion of China A-shares is due to concerns the pension’s investments may be hindered by potential issues including international settlement, market liquidity, restrictions on foreign investors, frequent policy changes and securities transactions suspension, GPIF said in a statement on March 31.
(Reporting by Summer Zhen in Hong Kong and Alun John in London; Editing by Amanda Cooper and Tomasz Janowski)
