Selloff in Chinese stock market `muted' annual returns, says CPPIB
Canada Pension Plan Investment Board said the selloff in stock markets, particularly in China, muted its annual returns.
The fund's emerging-market holdings posted a loss “predominately driven by investments in China where public equity markets were negatively impacted by unanticipated regulatory reforms and a resurgence of COVID-19 cases,” according to a statement Thursday.
Turmoil in global markets during the last quarter exacerbated the pressure.
“The volatility affecting public equities during the final quarter, at levels not seen since the outset of the pandemic, muted returns achieved through the first nine months of the fiscal year,” the firm said.
Investments in public equities returned 1.3 per cent in the fiscal year ended March 31. CPPIB earned 6.8 per cent in fiscal 2022, pushing net assets to $539 billion.
China's stock market took a hit last year amid a government clampdown on technology firms, tightening regulations on real estate sector and a resurgence of COVID-19 cases.
But since the beginning of 2022, global equities have been battered as well, by inflation, stricter monetary policy and the war in Ukraine. The decline in bond prices — the fastest drop in more than 40 years — also hurt returns, the fund said. CPPIB's calendar-year return in 2021 was 13.8 per cent.
CPPIB's private equity investments returned 18.6 per cent, driven by improved portfolio company earnings and outlooks in the information technology, financial and health care sectors in the U.S. and in Europe.
In an interview with the Financial Post, John Graham, the CPPIB's chief executive. said the pension fund is positioned to weather higher inflation than was expected a year ago because of a long-standing strategy of investing in real assets such as infrastructure and real estate.