The Swiss National Bank quietly offloaded its entire stake in the Chinese internet giant.
Balz Bruppacher, guest author
The alpine nation's central bank is one of the largest institutional investors in the world: The share of stocks in its portfolio has risen continually to 23 percent this year – totalling 222 billion Swiss francs ($242.4 billion) – since a 2004 reform allowing it to invest in foreign equities.
While the Swiss central bank's holdings are secret, it is required to report to the U.S. Securities and Exchange Commission which U.S.-listed stocks that it holds. The Swiss National Bank, or SNB, held $162 billion worth of stocks in 2,642 corporations per mid-year, according to the most recent SEC disclosure.
More «Climate Offenders»
A glance at the stocks held at the end of June shows that the SNB has made no concessions to climate change activists demanding a reduction in its exposure to oil and other environmentally risky equities. In fact, the central bank added to its positions in Exxon Mobil, to $1.1 billion, as well as Chevron, to $800 million, in the second quarter
The lengthy stock portfolio reveals a gaping hole: the SNB appears to have dumped its stake in Alibaba, the Chinese internet juggernaut which made for one of its top positions at the end of March. This means that the central bank sold all 4.71 million shares in Alibaba, valued at $1.07 billion at the end of the first quarter.
Seeking «Market-Neutral»
It isn’t clear if or how a rebalancing in late May of Alibaba’s shares on the MSCI to Hong Kong share class may have affected the SNB’s sale. «The Swiss central bank doesn't comment on individual positions,» the SNB said. Its investment guidelines are of equally little help: the SNB attempts a market-neutral investing stance.
«Rather than pursuing positive or negative equity selection, it replicates the international equity market as a whole,» according to its asset management policy. It deviates from this guideline in two specifics instances.
Various Exclusion Criteria
The first is that the SNB doesn't invest in systemically relevant banks, in order to avoid a potential conflict of interest with its mandate to ensure financial stability.
It also seeks to reflect the fundamental values and norms of Switzerland by not dipping into stocks of companies which «grossly violate values that are broadly accepted at a political and societal level.»
Human Rights Concerns?
That excludes companies which «seriously violate fundamental human rights, systematically cause severe environmental damage or are involved in the production of internationally condemned weapons.»
In Alibaba's case, human rights concerns are the only potential criteria for the SNB's offloading of its shares. It would however be surprising if the SNB chose to take a stance on the Chinese internet firm – shortly after the Swiss government awarded Alibaba with a key technology project (behind paywall, in German).
