**Kansas Retirement System Sells Nearly $300 Million in Chinese Securities**
Kansas has passed a bill that prompted the state’s retirement system to sell nearly $300 million in Chinese securities. The bill requires funds managed by the state to divest from designated countries of concern, including Communist China. This move represents the latest detachment signal amid the ongoing tense situation between China and the United States.
The “Countries of Concern Divestment Act” in Kansas came into effect in July, mandating the state’s funds to withdraw any investments in countries such as China, Cuba, Iran, North Korea, Russia, and Venezuela. The countries of concern are determined by the U.S. Department of State, but not all countries are individually listed as divestment targets.
Bruce Fink, Chief Investment Officer of the Kansas Public Employees Retirement System (KPERS), stated that KPERS sold securities from 10 Chinese and Hong Kong holding companies totaling $2.94 billion, accounting for 1% of the fund’s total investments.
Fink mentioned that an impending divestment from Russia cannot be executed due to sanctions imposed after the outbreak of the Ukraine conflict, rendering the security untradeable.
While Fink did not disclose the companies from which the fund divested, he mentioned that liquidating these investments resulted in a loss of $635,000 for the state.
“We have intensified due diligence on new and future investments to ensure that countries of potential investment for future managers do not include countries of concern,” said Fink.
Last Wednesday, Alan Conroy, Executive Director of KPERS, mentioned to the Retirement, Investment, and Benefits Joint Committee at the Kansas legislature that the fund now fully complies with the legal requirements.
In March of this year, Nick Hoheisel, Chairman of the Kansas House Retirement, Banking, and Investment Committee and a Republican state representative from Wichita, stated: “It is not appropriate for our state to allocate resources to countries that pose significant obstacles to human rights, international stability, and our national security.”
Although this bill expedites the divestment process, Kansas had already begun exiting the Chinese market. In November 2023, KPERS adjusted its international investment portfolio benchmark to prevent managers from investing in China.
Over the years, as U.S.-China relations continue to deteriorate, more states, including Florida, Missouri, and Indiana, have passed legislation to divest from China.
Last week, the Governor of Texas ordered state government entities to cease investing in China and to promptly sell such assets. Affected institutions include the Texas Teacher Retirement System.
The federal government’s Thrift Savings Plan for retirement funds began excluding Chinese and Hong Kong listed stocks from its benchmark index in November 2023 due to escalating tensions between the U.S. and China.
In October of this year, the Biden administration issued regulations restricting investment in high-tech sectors of the Chinese Communist Party, including quantum computing, artificial intelligence, and semiconductor chips.
(*This article references reporting by Nikkei News*)