So much for the Chinese taking over Australian businesses. A special report from Link Group subsidiary Orient Capital says that investments from Chinese sovereign wealth funds and other institutions in ASX 200 companies has halved in the past five years.
The latest report, ‘Ownership Trends in Australia’, is an update on a more fulsome version given to clients in February this year. It reflects the work that Orient Capital does for about 80 per cent of the ASX 300 issuer companies, giving it the most ownership data to analyse. The full report from February is available here. Highlights from the latest report include:
- Super funds have doubled their direct investment in the ASX 200 over the last five years, in large part due to the internalisation of their investment mandate. Some major funds such as UniSuper now manage more than 75 per cent of their ASX investment internally
- US ownership of the ASX 200 has increased 21 per cent in the last five years – largely due to index funds, which account for 60 per cent of the US position. Vanguard, State Street and BlackRock alone account for 90 per cent of this
- Conversely, looking at sovereign wealth and pension funds, investment from China has more than halved over the last five years, with a $2 billion decline in the last year alone, and
- Fortunately, Norway’s Norges Bank and Japan’s Government Pension Investment Fund have increased their investments by more than 70 per cent to offset the shortfall, the reports says.
Justin Ellis, Orient Capital general manager for Australia and New Zealand, said:“These changes have had a significant impact on how ASX 200 companies engage with their major shareholders, with super funds and sovereign funds pushing ESG to the forefront of discussions. Exemplifying this was Norges Bank’s recent announcement it would pull its investment in major oil and coal producers – a move which may impact billions of dollars of its investment in the ASX.”