Australia’s Future Fund will wind down its $200m of holdings in Russian companies, joining a wave of divestments as the country is hit with expanding international sanctions for its invasion of Ukraine.
The New South Wales government also says it intends to sell its holdings of Russian assets in its investment funds, while Australian superannuation funds are taking steps to reduce their exposure.
The Russian rouble crashed more than 40% after trading began on Monday after unprecedented international sanctions against the country’s financial system, although it later recovered some ground.
Restrictions have limited how much the Russian central bank can do to prop up the currency, and some Russian banks are now barred from the Swift international payments system.
Australia’s Future Fund said on Monday it had implemented all sanctions imposed by Australia, the US and the EU to date.
“We will be winding down the remaining exposure (which is not currently subject to divestment sanctions) as market conditions permit,” a spokesperson said on Monday.
The comments come after the Norwegian government announced that it’s $1.3tn (A$1.8tn) sovereign wealth fund – the world’s largest such fund – would divest its Russian assets.
Australia’s Future Fund had no holdings in Russian sovereign debt or other fixed income, the spokesperson said.
“We have devoted significant resources to compliance and will continue to do so as additional sanctions are announced,” they said.
The NSW treasurer, Matt Kean, said it was important “for liberal democracies to stand with Ukraine and stand up for our values”, as he announced his state’s divestment plans.
The $15bn NSW Generations Fund holds $75m in Russian debt and equities, according to the Sydney Morning Herald, which first reported Kean’s plans.
“I informed the treasury secretary of this intention on Friday afternoon and he is currently preparing advice on how to make this happen,” Kean said in a statement on Monday.
Australian superannuation funds have also been examining their exposure. Aware Super said it “took immediate steps to sell down our direct exposure to Russian assets in our portfolio last week”.
“We had identified an extremely small direct exposure to Russian assets of around 0.03% of our funds under management,” they said on Monday.
“We have no direct exposure to Ukraine. We’re also issuing instructions to all the asset managers we work with to ensure no new investments in Russia come into our portfolio.”
UniSuper said it had no direct exposure to Russia or Ukraine but was “exposed to the impacts of higher energy prices”.
“It’s pretty clear that the invasion has contributed to a perfect storm [of higher inflation and interest rates] that had already engulfed markets,” UniSuper’s chief investment officer, John Pearce, said.
Rio Tinto – the majority owner of one of Australia’s largest alumina refineries – warned last week of a potential “disruption to primarily the aluminium industry” as sanctions on Russia continued to expand.
Queensland Alumina Limited (QAL), which operates a refinery in Gladstone, is 20% owned by the Russian aluminium giant Rusal, which has previously been hit by US sanctions in 2018.
Rio Tinto, which owns the other 80% of QAL, did not provide further comment on the situation on Monday.
Instead it pointed to last week’s statement that it was closely monitoring the situation and was “confident that we have appropriate structures in place to ensure QAL’s operations will not be disrupted”.
The Australian foreign minister, Marise Payne, did not say whether Rusal would have to divest its share of QAL.
“I’m not going to comment on individual investments and details like that,” she told reporters on Monday when asked about Rusal.
“They will all be worked through according to the provisions that are determined in the sanctions process and with the financial institutions involved and businesses involved.”
A raft of sanctions imposed by the Australian government came into effect at midnight on Sunday, including financial sanctions and travel bans on Putin and four remaining permanent members of Russia’s security council, including the foreign minister, Sergei Lavrov, and the defence minister, Sergei Shoigu.
Payne said the government wanted to “remove any possibility of safe havens for people who have been either providing advice to or engaged in the decision-making of president Putin in his unlawful and wholesale breach of international law in his invasion of Ukraine”.
Labor has backed the Australian government’s actions. The shadow treasurer, Jim Chalmers, said there must be “a response to this vile and unprovoked act of aggression”.
“We should be supporting the Ukrainian people financially, we should be supporting them with weapons, we should be tightening the screws on the Russian economy and on Vladimir Putin himself and his cronies,” Chalmers told the Nine Network.
Russian state TV hosts urged viewers to “endure” and “overcome” the tough times.
“We’ll rebuild our own economy from scratch, an independent banking system, manufacturing and industry,” said Vladimir Solovyov, a Russian TV host who was sanctioned last week. “We’ll rely on ourselves.”
Additional reporting by Peter Hannam and Caitlin Cassidy.
