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Highlights
- Australian Superannuation fund are aligning to government’s push to exit from Russian assets.
- Queensland based Mega fund has decided to dump AU$133 million of its Russian Assets.
- Australian Treasurer Josh Frydenberg is increasing pressure to cut off ties from Russia.
Joining in the multiple sanctions on Russia, Australia’s second-largest superannuation fund has announced divestment from AU$133 million worth of its Russian assets. The decision comes on the back of Australian Treasurer Josh Frydenberg’s call to Australian superannuation funds on Thursday (3 March 2022) to review investment portfolios and take steps to divest from Russian assets. A supportive stance from the Australian Prudential Regulation Authority to not take any action against super funds divesting Russian assets has also paved way for the punitive action on Russian invasion in Ukraine.
Australian Superfunds join Russian sanctions, divest millions
Treasurer Josh Frydenberg is increasing pressure on the trillion-dollar Australian superannuation sector to cut off all financial links with Russia. As a result, Queensland based Megafund has decided to dump AU$133 million of Russian assets from its portfolio.
Even the Australian Retirement Trust, formed after the merger of Sunsuper and QSuper, also announced divestment from Russian assets. The federal government’s AU$200 billion Future Fund has also committed to liquidating Russian investments. Further WA‘s Government Employees Superannuation Board also revealed that it would reduce its exposure to Russian companies having closed bonds to Putin administration.
Superannuation funds are currently offloading millions from Russian equities and fixed-income assets. The companies have also instructed investment managers to not take any new investment exposure in Russia, Ukraine or Belarus. The moves are in line with the global push for institutional investors to liquidate Russian assets and as said by US President Biden ‘isolate’ Russian President Putin.
Also Watch- ASX in red as Russia-Ukraine War intensifies
Australian Treasurer Frydenberg calls for Russian exit
Treasurer Josh Frydenberg along with superannuation minister Jane Hume have asked Aussie funds to take strong steps and ditch their Russian assets. Both ministers are of the opinion that this would send a clear unequivocal signal about Australia condemning Russia’s ‘unprovoked and unjustified’ attack on Ukraine.
Backing their statements even the Financial Services Council, the representative of retail funds also said it would divest Russian assets. Even the Australian Prudential Regulation Authority will exempt super fund trustees from any action against divesting in Russian assets. Moreover, Australia has joined other Western central banks in squeezing Russia financially, preventing Bank of Russia from cashing in AU$8 billion worth of Australian bonds.
Are all Superfunds agreeing to Frydenberg?
While many Super funds are coming along to support the Australian government’s punitive moves on Russia, some funds are reluctant to commit to divestment. Few funds are fearful that selling Russian assets during challenging market conditions might not be in their best financial interests.
A few investment trust officials also said that divesting now would be challenging looking at the uncertainties related to the Russian economy. Also ruling out all of the asset exposure could be difficult.
Bottom line
Not just Australian superfunds, even big miners and energy companies are announcing exit from Russia. Australia’s prominent businessman, Andrew Forrest, has even termed Russian profits as ‘blood money’. Twiggy’s Fortescue renewable energy arm is even pulling out green projects from the Russian territory. Australia seems to be aligning with its strategic partners, US and UK and even Australian corporates are aligning action.
Do read- Coal prices firm up amid Russia-Ukraine war, ASX mining share advances 20% in 5 days
