An executive of a tech company (middle) addresses queries from Industrial Bank employees on a project that was supported by the bank’s green financing product in Fuzhou, capital of Fujian province. [Photo/Xinhua]
Chinese investors jump on the global ESG bandwagon to rebuild economies with lessons learnt during COVID-19 pandemic
Clouds are said to have a silver lining, but could “ESG” prove to be the golden edge to the dark COVID-19 cloud, transmuting the pre-pandemic profit craze of investors into a heart-felt desire for socially responsible, environmentally conscious investing?
Yang Yuebin, associate director of Sino-French joint venture AXA SPDB Asset Managers, believes so. He manages a 1.9 billion yuan ($271.2 million) fund that prefers financial assets offering sustainable returns with focus on ESG.
For the uninitiated, ESG refers to environment, social and governance－three fields that are receiving intense attention of COVID-19-chastened investors and fund managers who have to make quick, sensible decisions in liquidity-flush, stimulus-happy economies worldwide.
“The COVID-19 pandemic shows ESG matters more than ever,” said Eric Usher, head of the UNEP Finance Initiative.
Agreed Yang. “Value investing” is the philosophy that informs his fund management now. In this regard, Yang is not alone. Value investing is a trend gathering momentum in China and the rest of the world.
Yang and his ilk believe investors have the power to influence equity issuers to value sustainable development.
Yang deeply believes that investors should “choose investment products that benefit ESG”. That approach, he said, helps mitigate market uncertainty and limits volatility in a world made turbulent by the economic fallout of the pandemic.
“Like a commander in an army, the fund manager should take responsibility for the valuation of returns and risks, and the ESG label is like an insurance to mitigate risks when we discount cash flows of the equities,” said Yang.
These days, he is busy preparing for new offers of funds that focus on ESG-labeled assets.
There is a good reason behind his preference. When global markets were disrupted by COVID-19, listed companies with higher ESG ratings outperformed their peers over the same period. For instance, stock indices such as the S&P 500 ESG index and the MSCI’s emerging markets ESG leaders index rose more than other well-known indices.
A BlackRock report said that in the first quarter of this year, investment flows into global sustainable open-ended funds were 41 percent higher from a year earlier.
Market data provider Morningstar reported that almost $10 billion flowed into sustainable open-end mutual funds and exchange-traded funds in the United States in the first three months, more than half the 2019 total.
Usher said investors and fund managers are underlining the significance of policies that can mitigate climate change impacts, reduce economic inequality in the post-pandemic era and improve the resilience of corporations through advanced governance.
In China, investments under the theme of “sustainability” gained momentum during the COVID-19 pandemic. Issuance of bonds with the “green” label had tripled in April compared with March, according to a report from the Climate Bonds Initiative (CBI), an international non-profit institute.
Chinese green bond issuers already topped the global green bond market in 2019, recording a total of $55.8 billion in offerings in both onshore and offshore bond markets, up by 33 percent from 2018, the report said.
A key issue for investors, however, is to figure out if the bonds or shares are really “green” or “ESG-related”, and whether their investment can support sustainable development of the companies and society, said analysts.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
