China wealth fund takes a US Visa
China's sovereign wealth fund has taken a stake in Visa, according to a media report on Tuesday, dipping its toe back into the market as Beijing agonises over whether to be more aggressive in its overseas investments.
By Agencies |
BEIJING: China's sovereign wealth fund has taken a stake in Visa, according to a media report on Tuesday, dipping its toe back into the market as Beijing agonises over whether to be more aggressive in its overseas investments. Scarred by big-paper losses that China Investment Corp - the wealth fund - and China Development Bank have suffered on investments they made last year, some policy makers are counselling caution, saying China still lacks expertise. But others scent that a meltdown in US financial stocks - culminating in the fire-sale of investment bank Bear Stearns - is a chance for the government and state-owned banks and firms to snap up bargains.
���Because of the subprime crisis, the value of financial assets in the United States has fallen to a more reasonable range, which creates a fairly good opportunity for China to invest,��� said Li Ruogu, president of Export Import Bank of China.
In an article to be published in the International Economic Review, a Beijing academic journal, Li said China urgently needed to invest abroad to diversify its huge foreign exchange reserves, which exceeded $1.6 trillion at the end of February. CIC, which separately manages $200 billion, invested more than $100 million in Visa���s initial public offering last week, Caijing magazine reported on its website, www.caijing.com.cn. Caijing cited unidentified sources. CIC declined to comment.
China Life Insurance said on Monday that it had also bought into Visa���s offering, which raised $17.9 billion in the largest-ever US IPO. The country���s largest insurer congratulated itself that the value of its $300 million stake had already risen by about 50%. That contrasts with the losses that CIC is showing on the $3 billion it paid for a 9.9% stake in US private equity group Blackstone last May and that China Development Bank (CDB) is nursing on the 2.2 billion euros it paid for 3.1% of British bank Barclays in July. And CITIC Securities would presumably have lost most of its planned $1 billion investment in Bear Stearns, which is being sold for a song to JPMorgan, if Chinese regulators had approved the deal in time.
CHANGING MOOD
These setbacks have sparked fierce criticism online and soured the political mood for Chinese institutions to go abroad. State-owned CDB had planned to invest in Citigroup but failed to get the go-ahead from China���s banking regulator because of a more acute awareness of the risks involved, bankers said. Guo Shuqing, chairman of China Construction Bank, said his bank looked at 26 possible investments over the past year but did not follow through due to worries ranging from interest rate risk to the coolness of overseas authorities.
���Because of the subprime crisis, the value of financial assets in the United States has fallen to a more reasonable range, which creates a fairly good opportunity for China to invest,��� said Li Ruogu, president of Export Import Bank of China.
In an article to be published in the International Economic Review, a Beijing academic journal, Li said China urgently needed to invest abroad to diversify its huge foreign exchange reserves, which exceeded $1.6 trillion at the end of February. CIC, which separately manages $200 billion, invested more than $100 million in Visa���s initial public offering last week, Caijing magazine reported on its website, www.caijing.com.cn. Caijing cited unidentified sources. CIC declined to comment.
China Life Insurance said on Monday that it had also bought into Visa���s offering, which raised $17.9 billion in the largest-ever US IPO. The country���s largest insurer congratulated itself that the value of its $300 million stake had already risen by about 50%. That contrasts with the losses that CIC is showing on the $3 billion it paid for a 9.9% stake in US private equity group Blackstone last May and that China Development Bank (CDB) is nursing on the 2.2 billion euros it paid for 3.1% of British bank Barclays in July. And CITIC Securities would presumably have lost most of its planned $1 billion investment in Bear Stearns, which is being sold for a song to JPMorgan, if Chinese regulators had approved the deal in time.
CHANGING MOOD
These setbacks have sparked fierce criticism online and soured the political mood for Chinese institutions to go abroad. State-owned CDB had planned to invest in Citigroup but failed to get the go-ahead from China���s banking regulator because of a more acute awareness of the risks involved, bankers said. Guo Shuqing, chairman of China Construction Bank, said his bank looked at 26 possible investments over the past year but did not follow through due to worries ranging from interest rate risk to the coolness of overseas authorities.
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