Trump and the Labor Department directed a board in charge of federal retirement dollars to halt plans to invest in Chinese companies.
President Donald Trump and the U. S. Labor Department on Monday directed a board charged with overseeing billions in federal retirement dollars to halt plans to invest in Chinese companies.
Labor Secretary Eugene Scalia warned the Federal Retirement Thrift Investment Board that its current plan to invest federal savings would place “billions of dollars in retirement savings in risky companies that pose a threat to U. S. national security.”
The international index that the Thrift Savings Plan is set to start tracking later this year is called the MSCI ACWI ex USA IMI, which includes equities in a broad range of developed and emerging markets, including China.
“At the direction of President Trump, the Board is to immediately halt all steps associated with investing the I Fund according to the MSCI ACWI ex USA IMI, and to reverse its decision to invest Plan assets on the basis of that international equities index,” according to a copy of the letter seen by CNBC.
At issue is the management of the TSP, a retirement savings fund for federal employees and members of the military. A federal investment fund within TSP called the I Fund, which offers federal employees exposure to international stock markets, held about $41 billion in assets out of a total $557 billion in TSP total as of the end of March.
“There’s a lot of focus on this issue from a national security standpoint, but the investor protection angle is equally important. China is an international outlier in not permitting U. S. regulators to access the audits of its companies listed on U. S. exchanges, which puts our investors at risk,” wrote Clete Willems, a former trade advisor to the Trump White House and a partner at Akin Gump.
The Labor secretary, who cited bipartisan calls to restrict U. S. investment in Chinese stocks, wrote that the president is opposed to the board’s 2017 decision to allow its international fund to track an index that includes China-based stocks based on national security and investor risk concerns.
