UniSuper’s chief investment officer John Pearce has suspended the $85 billion superannuation fund’s stock lending program and called on his industry peers to do the same amid the worst sell-off in the Australian equity market since the black market crash of 1987.

“We are now in a market gripped by panic,” Pearce said in a statement. “We believe that restricting the ability to short sell is in the best interest of promoting an orderly market.”

The CIO’s instruction comes just as equity markets extended their sell off around the world, despite an emergency rate cut from the Federal Reserve to pump more stimulus into the financial system and quell investor fears triggered by the coronavirus. The ASX 200 index closed down 9.7 per cent, extending its slump from the peak in February to more than 30 per cent. The benchmark gauge is now trading at its lowest level since 2016.

Australia’s $2.9 trillion superannuation industry has the highest average allocation to equities among the world’s seven largest pension systems including the US.

“We are only one fund and the efficacy of our actions will depend on how many other funds follow a similar path,” Pearce said. “Of course, we are not privy to the thinking of other funds who lend their stock.”

UniSuper said it had suspended the stock lending program indefinitely and has instructed its custodian BNP Paribas to recall all shares out on loan “without exception.” Pearce said in normal functioning market, the ability to short sell added to “market efficiency.”

UniSuper’s $26 billion balanced fund topped Chant West’s best performance list for 2019 thanks to its high allocation to listed equities. The fund returned 18.4 per cent last year compared to the industry’s median of of 14.7 per cent. About 60 per cent of the portfolio is invested in the stockmarket including 38 per cent in Australia.