Saturday, February 23, 2008

Chinese Capitalism expands

China Investment Corporation , the nation's $200 billion sovereign wealth fund, will pick money managers for its overseas equity investments by the end of the month, people involved in the selection process said , according to Bloomberg. China Investment Corp is a state owned investment manager. The firm invests in the public equity and fixed income markets across the globe. The CIC will operate in a completely commercial way despite its governmental backup, the sources stressed, explaining that "it will deal with its forex investment business independently by persisting in the principle of separating government functions from company management" as Asia Times describes it .
"The company's principal purpose is to make profits," said Li Yang, director of the finance research institute of the Chinese Academy of Social Sciences. .

Two to three companies will be chosen for each of the four mandated product areas, according to one of the people, who declined to be named because the plan hasn't been made public. CIC hasn't decided if it will disclose a final list, said a press officer at the Beijing-based company, who also asked not to be identified.
China is seeking to diversify its $1.5 trillion in currency reserves to obtain higher returns than U.S. Treasury bonds.

Sources in the Japanese Government told The Times that the China Investment Corporation may be considering the purchase of a “sizeable stake” in one of the country's largest oil and gas companies, Inpex. The CIC is also understood to be actively recruiting in Japan to find a domestic fund manager to monitor its investments on the Tokyo stock exchange.
The CIC's plans to invest what could be as much as $10 billion across a range of Tokyo-listed stocks comes as Yoshimi Watanabe, the Japanese Financial Policy Minister, described the attention of the Chinese wealth fund as “most welcome”.

June 2007 CIC takes a $3 billion stake in US private equity firm Blackstone

September 2007 The fund officially launches with initial capital of $200 billion

December 2007 Spends about $100 million on a stake in Hong Kong's China Railway Group

December 2007
Takes a 9.9 per cent stake in Morgan Stanley worth $5 billion

February 2008 Reports suggest that CIC is in talks about investing $4 billion in a JC Flowers vehicle set up to buy ailing financial groups

February 2008 CIC and China Shenhua Group have been in informal talks to buy a 15.85 per cent stake in Australia's Fortescue Metals Group in a deal worth $2 billion, reports suggest

February 2008 Considers the purchase of a “sizeable stake” in Inpex, one of Japan's largest oil and gas companies

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