Fidelity Investments Inc. has reduced its stake significantly in PetroChina Co., China’s largest oil producer, by more than 90 percent of American depositary receipts in the middle of calls for the mutual-fund giant to divest from companies linked to Sudan. The divestment came after China comes under increasing criticism for its role in Sudan, where militias fighting in the Darfur region have killed hundreds of thousands in what some political analysts are calling genocide. Human-rights groups are repeatedly say Beijing, which is the biggest foreign investor in Sudanese oil, is not doing enough to stop the fighting.
PetroChina, Asia’s biggest oil producer, announced on Wednesday that investors have the freedom to decide whether to hold the stock, after Fidelity Investments cut its stake amid pressure to sell out because of the firm’s relations to Sudan. PetroChina’s president, Jiang Jiemin, told reporters at the company’s annual general meeting in Beijing, ‘Whether to sell or buy our shares is the choice of individual investors’. Fidelity, the world’s biggest mutual-fund company, sold at least 38 percent of the 1.1 billion Hong Kong-listed PetroChina shares held as of December, revealed a regulatory filing on Tuesday.
In the meanwhile, energy analysts have argued that Fidelity’s stake cut will not affect PetroChina’s share price in the long term as the company has really good development prospects given oil discoveries and stable production growth. Political issues like Sudan that have affected shareholders’ preferences for a long time are not the main factor.
Fidelity in the US has a considerable stake in Petrochina whose parent CNPC is a substantial investor in Sudan’s oil fields. CNPC has joined hands with the Sudanese government to control an oil field in Southern Darfur. However, pressure groups argue that Khartoum uses the majority of its oil revenues to finance spending on arms and militia. Fidelity refused to say whether it has cut its holdings in response to pressure from human rights groups. A spokesman said that the company’s individual fund managers make their own investment decisions.
For the past two decades, human-rights groups have mounted extreme pressure on university endowments and public-pension funds to divest their holdings in politically sensitive regions, such as South Africa during apartheid. In recent times, activists have also started to pressure mutual funds over the same kinds of investments, as well as on other issues, such as global warming and gay marriage, citing reasons that the funds should respond to the wishes of investors who put billions of dollars a year under their control. 
Filings with the SEC also show Fidelity has sold many shares in another Chinese oil firm, Sinopec that has attracted similar criticism. However, as a matter of fact, Securities filings have showed that other big investors in PetroChina include funds of Franklin Templeton Investments and Warren Buffett’s Berkshire Hathaway Inc., and show no recent sales of PetroChina holdings as big as Fidelity’s. In addition to it, other Boston based firm, Wellington Management, has been a big holder in Sinopec but a recent filings show it has cut its stake significantly.
The Darfur coalition has targeted China since it considers Beijing’s financial support for Khartoum, combined with its position as a permanent member of the UN Security Council, have been essential in mitigate international pressure over the Darfur issue. Despite of some instances of aggressive defense by Beijing and its state enterprises of the country’s soaring investments in Africa, Chinese interests are in fact working hard behind the scenes to combat the negative perception in the West about their activities on the continent.
