Friday, May 24

Canada Pension Fund’s Holdings in 6 Stocks Turn Red Amid Canada-India Row

Amid the ongoing tensions between Canada and India, the holdings of Canada’s pension fund in six stocks have seen a downturn. This decline comes as a result of the strained relationship between the two nations following diplomatic expulsions and allegations. While the specific stocks affected were not mentioned in the report, it highlights the potential economic consequences of the political disputes between the two countries.

As tensions persist between Canada and India, data from corporate database AceEquity reveals that several Indian stocks, including Kotak Mahindra Bank Ltd, Zomato Ltd, and Delhivery Ltd, have exposure to Canada. Canadian pension funds held stakes ranging from 1.5% to 6% in these companies as of June 30, with a total value of Rs 16,062 crore based on Wednesday’s intraday prices.

Overall, foreign portfolio investors (FPIs) based in Canada managed a total of Rs 1,50,871 crore in equity assets under custody (AUC), making Canada the seventh-ranked country in terms of FPI investments, with the United States and Singapore leading the way, according to data from the National Securities Depository Limited (NSDL).

 

Canada Pension Fund's Holdings in 6 Stocks Turn Red Amid Canada-India Row
Canada Pension Fund’s Holdings in 6 Stocks Turn Red Amid Canada-India Row

 

Kotak Mahindra Bank stands as the largest Indian stock holding for the Canada Pension Plan Investment Board (CPP Investments). As of June 30, the pension fund held 4,38,81,500 shares, equivalent to a 2.68% stake, in Kotak Mahindra Bank. These shares were valued at Rs 9,494.36 crore in Wednesday’s trade, with Kotak Mahindra Bank’s stock down 0.45% at Rs 1,789.50 on the BSE.

In the second position is Zomato Ltd, in which the Canada Pension Plan Investment Board owns 20,35,24,655 shares, constituting a 2.37% stake, valued at Rs 2,050 crore. Zomato’s stock experienced a 2.10% decline, trading at Rs 100 on the BSE.

The third entry on the list is Delhivery Ltd, where the Canadian fund held a 6% stake, representing Rs 1,884.49 crore in holdings with 4,38,81,500 shares. Delhivery’s stock initially dropped 3.3% to reach Rs 413.95 in early trading but recovered some losses as the session progressed.

Parth Nyati, Founder at Tradingo, pointed out that despite the Canada pension fund’s significant investments in the Indian equity market and the exposure of several Indian IT companies to the Canadian market, the financial market appears to be adopting a relatively composed stance towards the issue, primarily viewing it as a political matter at this stage.

Nyati emphasized that pension funds are renowned for their long-term investment perspective and are not inclined to react impulsively to geopolitical events. They tend to maintain a strategic outlook and are likely to monitor developments before making any major adjustments to their investments. While there is a reasonable expectation that the current tension may be resolved over time, further escalation of the situation may necessitate a comprehensive analysis.

In the case of Indus Towers Ltd, Canada Pension Plan Investment Board held 5,86,45,238 shares, representing a 2.18 percent stake, valued at Rs 1,072.32 crore. The stock saw a decline of 1.49 percent to reach Rs 182.35.

As for One 97 Communications Ltd (Paytm) and FSN E-Commerce Ventures Ltd (Nykaa), the fund had investments worth Rs 951 crore and Rs 610 crore, respectively. Nykaa witnessed a decrease of 2.38 percent, while Paytm declined by 2.15 percent.

The recent strain in Canada-India relations stemmed from Canadian Prime Minister Justin Trudeau’s allegations of Indian government involvement in the killing of a Khalistani separatist. India refuted these unsubstantiated claims and responded in kind by requesting the departure of a senior Canadian diplomat from the country within five days, mirroring a similar action taken by Canada.

The Asia Pacific region represented slightly more than one-fourth of the net assets of Canada Pension Plan Investment Board (CPP Investments), totaling $575 billion at the end of the June quarter. Public equities constituted 24 percent of the fund’s holdings.

In its first-quarter update, CPP Investments announced a commitment of 160 million Canadian dollars to the Multiples Private Equity Fund IV, which focuses on mid-market growth opportunities in India. Additionally, it invested an additional 537 million Canadian dollars in its Indian toll roads portfolio company, IndInfravit Trust, where it holds a 60.8 percent stake, to support the acquisition of four operational road concessions.

Please note that this information is provided for reference and may not be up-to-date.


Also read: Could the Strained Relationship Between India & Canada Affect Trade?

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