Donald Trump is threatening a takeover Greenlandan Arctic island that is an autonomous territory Denmark. Meanwhile, the Danish pension fund is giving up investing in US treasury bonds. “It is not directly related to the ongoing conflict between the U.S. and Europe, but it obviously did not make the decision any harder,” Anders Schelde, chief investment officer at AkademikerPension, told CNBC.
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Anders Schelde said the decision was dictated by what he sees as the “poor condition of US public finances” in the context of the US debt crisis.
However, the decision is also the result of escalating tensions between the US and Denmark after Trump's recent threats to impose tariffs on European countries if Greenland is not sold to the United States, notes CNBC.
The fund currently has approximately USD 100 million. in US treasury bonds and plans to retire from this position by the end of the month.
The Danes are taking millions of dollars from the USA
The United States is facing growing public debt. The US recorded a budget deficit of $1.78 trillion last year.
Rating agency Moody's downgraded the creditworthiness of the United States in May from Aaa to Aa1citing the budget deficit and high borrowing costs associated with refinancing debt at high interest rates.
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Maciej Zieliński / PAP / photos
Additionally, Denmark has become increasingly hostile towards the US as Donald Trump has escalated his demands to take over Greenland. Trump announced over the weekend that he would introduce additional tariffs on several European countries from February 1. These are the countries that sent their troops to Greenland.
Are investors turning away from the US?
Treasury yields in the U.S. and abroad rose sharply on Tuesday, a sign that investors are feeling mounting geopolitical tensions. The US dollar and stocks fell, and gold reached new highs.
Bridgewater Associates founder Ray Dalio said on CNBC on Tuesday that sovereign wealth funds could begin to withdraw their U.S. investments if they no longer view the United States as a stable trading partner.
Bloomberg points out that AkademikerPension is another Danish pension fund that is abandoning US bonds. Laerernes Pension withdrew from most of its U.S. debt holdings before the Greenland dispute broke out, citing concerns about the sustainability of U.S. debt and the threat to the Fed's independence. Denmark's largest pension fund, PFA, recently reduced its holdings of US bonds.
See also: Denmark withdraws from participating in the Davos summit. It's all because of Trump and Greenland
US finances made us “decide to find an alternative way to manage financial liquidity and risk” Schelde said.
What does the Danish fund do? “At AkademikerPension, we make sure to provide you with the best conditions for a long and safe life. We invest your money responsibly and avoid, for example, oil, gas and tobacco. And with one of the best average long-term returns in the industry, you can safely entrust your retirement savings to us,” we read on the Danish fund's website.
Source: CNBC, Bloomberg
