Global superannuation funds are collectively reducing their US stock allocations. That is the key headline of a report in today’s Financial Times.
According to a Financial Times survey, Australian superannuation fund ART, which manages $260 billion; Canada’s La Caisse, which manages $388 billion; and the UK’s People’s Pension, which manages £45.9 billion, are all currently allocating less to US stocks than their weights in the global benchmark index would suggest.
Put simply, the latest survey found that superannuation funds have started selling US assets or pausing further purchases, leaving several institutions with US stock holdings below the global average.
During the September rate-hike phase, Warsh argued that financial liquidity had not yet tightened enough. But large institutions have already sensed some risk, so selling or pausing further purchases is just standard practice.
When global risk-free rates remain high for an extended period (as reflected in long-term bond yields), the opportunity cost of capital rises and risk liquidity contracts. For highly valued US stocks, this means strong earnings reports are needed to justify their valuations. AI has also driven high index concentration, so long-term investors are beginning to reassess liquidity risks and make appropriate portfolio adjustments.
Of course, this does not mean that US AI stocks have peaked or that AI has entered bubble territory. Large institutions are more cautious and systematic in their assessments than ordinary investors.
So I don’t think this report is warning of short-term risks for US stocks or AI shares. Rather, it is highlighting that the squeeze on risk liquidity from persistently high global long-term bond yields is gradually becoming apparent. If this situation continues for about another year, the resulting liquidity contraction will be keenly felt by ordinary investors. For retail investors, that is when the real period of risk will begin.
P.S. The original Financial Times article is behind a paywall, so I could only share a screenshot of this report from Jin10. Sorry! #美联储10月加息概率降至17%
According to a Financial Times survey, Australian superannuation fund ART, which manages $260 billion; Canada’s La Caisse, which manages $388 billion; and the UK’s People’s Pension, which manages £45.9 billion, are all currently allocating less to US stocks than their weights in the global benchmark index would suggest.
Put simply, the latest survey found that superannuation funds have started selling US assets or pausing further purchases, leaving several institutions with US stock holdings below the global average.
During the September rate-hike phase, Warsh argued that financial liquidity had not yet tightened enough. But large institutions have already sensed some risk, so selling or pausing further purchases is just standard practice.
When global risk-free rates remain high for an extended period (as reflected in long-term bond yields), the opportunity cost of capital rises and risk liquidity contracts. For highly valued US stocks, this means strong earnings reports are needed to justify their valuations. AI has also driven high index concentration, so long-term investors are beginning to reassess liquidity risks and make appropriate portfolio adjustments.
Of course, this does not mean that US AI stocks have peaked or that AI has entered bubble territory. Large institutions are more cautious and systematic in their assessments than ordinary investors.
So I don’t think this report is warning of short-term risks for US stocks or AI shares. Rather, it is highlighting that the squeeze on risk liquidity from persistently high global long-term bond yields is gradually becoming apparent. If this situation continues for about another year, the resulting liquidity contraction will be keenly felt by ordinary investors. For retail investors, that is when the real period of risk will begin.
P.S. The original Financial Times article is behind a paywall, so I could only share a screenshot of this report from Jin10. Sorry! #美联储10月加息概率降至17%
