Texas Governor Orders State Agencies To Divest From China

Texas Governor Greg Abbott has ordered state agencies to divest their assets in China and halt any new investments, citing financial and security risks associated with the Chinese government.

Abbott also instructed the University of Texas/Texas A&M Investment Management Co. (UTIMCO), managing $80 billion, to divest from China earlier this year. I Photo: UTIMCO

This marks an escalation in U.S.-China tensions, impacting global capital flows, reported Tom Westbrook, Summer Zhen, and Jiaxing Li for Reuters.

In a letter dated Nov. 21 and posted online, Abbott accused China’s ruling Communist Party of "belligerent actions" that increased investment risks for Texas.

"I direct Texas investing entities that you are prohibited from making any new investments of state funds in China. Existing investments must be divested at the first available opportunity," the letter stated.

Texas has previously taken an activist approach to public investment policies, including restrictions on pension funds engaging with Wall Street firms promoting environmental, social, and governance principles.

The state’s Teacher Retirement System (TRS), managing $210.5 billion as of August, holds approximately $1.4 billion in Chinese yuan and Hong Kong dollar assets, with Tencent Holdings as its 10th largest position, valued at $385 million.

Abbott also instructed the University of Texas/Texas A&M Investment Management Co. (UTIMCO), managing $80 billion, to divest from China earlier this year.

Following the announcement, Chinese markets fell sharply, with the Shanghai Composite dropping 3%, while Tencent shares declined 2% during Hong Kong trading on Friday.