Posted on 10/15/2023 5:12:02 PM PDT by george76
Index providers, Western managers face growing pressure over Chinese investments..
The report by the Coalition for a Prosperous America said a Vanguard fund has put money into companies sanctioned by the U.S. government over alleged human rights abuses..
HONG KONG -- Top index fund manager Vanguard has invested in scores of Chinese companies that have links to the nation's military or have been sanctioned by the U.S. government over alleged human rights abuses, according to research by a bipartisan U.S. group.
The $98.7 billion Vanguard FTSE Emerging Markets exchange-traded fund has invested in the subsidiaries of 60 companies that are part of China's military industrial-complex, according to the report by the Coalition for a Prosperous America.
The group, which represents U.S. manufacturers, workers, farmers and ranchers, said the Vanguard fund had also put money into eight companies sanctioned by the U.S. government over alleged human rights abuses in China's Western Xinjiang region.
...
Vanguard and its index provider, FTSE Russell, are a large part of the problem..
Vanguard's plunge into A-shares has, in our view, fundamentally transformed its relationship with the PRC [People's Republic of China], making it a de facto business partner of the CCP [China Communist Party], the ultimate authority over publicly traded companies in China."
The report said "there are no absolute restrictions on asset managers investing in Chinese equities," but added that index funds have put money into subsidiaries of Chinese military companies that have been subject to U.S. sanctions.
Vanguard, for example, has invested $46 million in three subsidiaries of Aero Engine Corporation of China (AECC), and $44 million in 10 companies under the Aviation Industry Corporation of China (AVIC), the report said, citing FactSet data.
The two Chinese parent groups develop advanced aircraft technologies and are prohibited from importing military technology from the U.S., according to the U.S. Department of Commerce.
AECC Aero-Engine Control, a Shenzhen-listed arm of AECC in which Vanguard reportedly has invested $10 million, has also won backing from the National Military-Civil Fusion Industry Investment Fund, led by China's Finance Ministry, according to a disclosure by the Chinese company.
AECC Aero-Engine amended its corporate constitution last year to include new references to Chinese President Xi Jinping. It authorized its in-house Communist Party organization to lead the company with "Comrade Xi Jinping as the core" and pledged to "deeply study and thoroughly implement Xi Jinping thought on socialism with Chinese characteristics for a new era."
Vanguard accelerated purchases of A-shares after it announced a joint venture in December 2019 with Ant Financial Group, the payment giant backed by Alibaba, hoping to tap into China's retail wealth management business, the report said. In 2021, the U.S. manager abandoned a plan for a wholly owned mutual fund company in the country, citing a "crowded" market.
While index providers play a role in guiding such investments, they would not change underlying component stocks in a benchmark without the fund manager's consent, the report said. In 2020, FTSE dropped eight companies identified by the Trump administration as having Chinese military links.
Vanguard and FTSE Russell did not respond to request for comment by the time of the publication.
Western fund managers holding trillions of dollars of assets are coming under increasing political pressure as the U.S. steps up restrictions on investments it claims will help China enhance its military and technological power.
BlackRock, the first foreign fund manager with a wholly owned mutual fund company in China, together with index maker MSCI, was questioned in August by the China committee of the U.S. House of Representatives about whether it was directing funds into Chinese military companies.
State Street Global Advisors Asia was dropped last year as the manager of the Hong Kong-listed Tracker Fund after the U.S. manager quickly reversed a decision to stop investing in companies that the Trump administration said were linked to the Chinese military.
Didn’t Lenin say the capitalist would sell them the rope they would use to hang us with or something?
ESG investing was always commie investing anyway. This is just more direct.
I’ll be calling my investment professional tomorrow with instructions to remove and or avoid any Vanguard or Blackrock investments, no matter how small.
Vanguard merely provides the ETF, and doesn’t put any of its own money into the shares. Investors on the stock exchange are the ones who supply the cash.
In China woke HR departments don't exist. The Chinese don't think a degree in "women's
studies" is equivalent to a degree in engineering. The Chinese engage in constructive racism
to advance their interests. They don't care if it hurts your feelings.
China delenda est.
China should be declared a terrorist state, with all the penalties that entails.
The entire purpose of our immigration policies should be to brain drain China, India, Indonesia, and everywhere else they have tens, or hundreds, of really bright and/or really entrepreneurial people.
I will somewhat defend Vanguard and BlackRock. And that’s because I have mixed feelings about this. Index funds are supposed to invest robotically, based on how the fund was originally set up. For example, suppose an index fund is set up to invest in the 100 largest companies in the world.
The manager has no leeway to ignore any company, for whatever reason. He cannot exclude a company because it’s not gay-friendly or because it’s not green. If it’s one of the 100, it’s in the fund. If the manager is allowed to do otherwise, then it’s no longer an index fund. It’s not doing what investors expect it to do.
In a way, that’s a good thing. If I invest in an index fund, I don’t want the manager to be making all sorts of social decisions. I expect him to follow the fund’s charter, period.
On the other hand, I’d rather not be investing in companies that actively work to harm the United States.
So what’s the solution? Perhaps Congress could identify such companies. And then an index fund’s charter could be amended to exclude such companies.
bttt
Please see my post #10. Before leaving a fund company for good, perhaps it might be a good idea to transfer out of any foreign index funds and into domestic index funds.
Just a thought.
Once we ‘brain drain’ them, where will their refugees of the newly created basket case countries go? We don’t have a good recent track record of refusing ‘refugees.’
Buying stock on secondary market is not directly funding any company.
Bump
That is just great news. Now the people we trust our retirement to are selling us down the river . WTF!
Using our investments for thier own gain with our enemies
Look at it this way: they are investing in Raytheon subcontractors.
https://dailycaller.com/2023/06/19/raytheon-china-greg-hayes-decoupling/
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