​Danish doctors’ pension fund divests China as trade tensions bite

The Danish pension fund for doctors is divesting all Chinese assets, citing risk-return considerations, as well as growing trade tensions.

Frederiksberg-based Lægernes Pension said it was selling off all Chinese investments in its portfolio, some DKK1.5bn (€201m) of assets, which were mainly listed equities.

The DKK125bn pension fund said: “The sale is a consequence of an increased imbalance between return and risk for Chinese investments.”

The decision had been made as a consequence of several factors that made it less attractive to invest in China, it said in an announcement last week.

Lægernes Pension said it invested globally to achieve attractive returns, and continuously assessed the relationship between return and risk of investing in different parts of the world.

“The Chinese economy is facing a number of structural challenges,” the pension fund said.

“China is facing a significant decline in the workforce, has very high private debt and is currently challenged by a tough adjustment of the property market.

“In addition, growing geopolitical and trade tensions have, in the pension fund’s assessment, increased the unpredictability associated with investments in China,” it said. 

US president Donald Trump levied 10% tariffs across all Chinese imports at the beginning of February, and followed that up with another 10% duty on 4 March, which comes on top of tariffs imposed in Trump’s first term as president.

Lægernes Pension said the divestment initially applied to listed investments, which also include investments in Macau and Hong Kong, and that it would also not make any new unlisted investments in China.

In the context of its ongoing analysis and balancing of the risk-return relationship in its investment portfolio, the pension fund mentioned it had sold some DKK1bn of assets in Russia immediately before the country invaded Ukraine in February 2022.

“Lægernes Pension thus avoided the pension fund’s investments being affected by major losses caused by the subsequent sanctions against Russia,” the Danish pension fund said.

In December, Danish pensions firm Sampension said it was divesting DKK161m of shares in Chinese e-commerce company PDD Holdings, which owns online marketplace Temu, citing concerns around consumer protection.

Just over a year ago, Denmark’s P+ said it divested 10 Chinese firms and put another 10 under heightened observation over concerns about connections to forced labour linked to solar cell production.

Last year, a number of European pension funds told IPE about reduced allocations to China amid increased economic uncertainty.

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