Fund groups urged to rebuke China over Hong Kong crackdown

UK politicians including the former Conservative party leader have called on large investors to use their voice more forcefully to condemn China’s crackdown in Hong Kong.

China’s move to impose a national security law on Hong Kong has drawn widespread condemnation, which was inflamed further last week after Hong Kong police detained media mogul Jimmy Lai.

But Gareth Davies, a backbench Tory MP, said investment houses had been slow to speak out against China. “Fund managers can’t pick and choose the issues they stand up on,” Mr Davies told the Financial Times. “Any fund management organisation investing in a country that has caused international outrage should be looking at this.”

Mr Davies, a former fund management executive, called on asset managers to follow the example of £334bn group Aviva Investors, which voiced unease over HSBC and Standard Chartered’s backing of the national security law.

“Speaking up is an important step as it helps the global coalition to hold China to account,” he said, adding that nearly £50bn of assets managed by UK fund groups was invested in China.

His views were echoed by former Conservative party leader Iain Duncan Smith, who said asset managers should ask “serious questions” about companies like HSBC and Standard Chartered that had shown support for China.

“There are more important things in life than two or three per cent return on your money,” said Sir Iain, a known China hawk.

While he cautioned that the decision to publicly criticise companies or divest from them was up to investors, he said asset managers needed to put pressure on companies that were “giving licence to the Communist Party of China to trash an international treaty”.

However, several fund managers dismissed the idea that their holdings compelled them to participate in political debates. One top 20 shareholder in HSBC and Standard Chartered added it was up to politicians to challenge China, noting that the number of companies that exclude the country as an end market was “close to zero”.

Another top 30 shareholder added: “Our job is to make sure companies are well run and obey the law. If the law changes, they have to abide by local regulation. We are not trying to set the moral compass.”

HSBC and Standard Chartered declined to comment.