News: Taiwan's BLF excludes mainland China in new overseas mandates
Taiwan’s Bureau of Labor Funds (BLF) has started to exclude China while designing indices for new overseas mandates.
It also clarified that it has very low and in-direct mainland China and Russia exposure in its overall portfolio.
“BLF has taken the initiative to effectively avoid relevant investment risks. Indexes of new overseas investment mandates have all excluded mainland China,” Deputy Director General Liu Li-ju said in a statement released August 4.
The statement did not say when the exclusion began.
“In addition, the fund has not opened up direct investment in mainland China's A-shares, so the impact is still controllable,” Liu said.
The fund noted that in recent years, mainland China has faced economic challenges such as weak domestic consumption and investment, property market bubbles, intensifying financial risk, and issues in local government debt.
BLF's investments in mainland China aggregated about $1.57 billion at the end of 2023, or 0.8% of total assets.
Total assets stood at NT$7.37 trillion ($226.8 billion) at the end of June with an investment return of 13.1% for the first six months of 2024.
BLF also does not directly invest in Russian-related stock and debt positions, the deputy director general said.
BLF
Its externally managed investments were passively exposed to Russia and China due to index-tracking, the fund said, noting that the investments were considered normal transactions at the time.
About 52% of BLF’s total assets under management were externally managed, while 48% was managed in-house at the end of June.
BLF could not foresee the impact of the Russia-Ukraine war on financial markets and thus abruptly liquidate assets, Liu said.
“BLF will continue to urge external managers to monitor the development of the Russian sanctions and adjust positions in a timely manner to protect the interests of the fund,” she said.
Russia-related investments totalled $242 million, or 0.12% of the fund's assets.
Shusi He contributed to this story.