Skip to comments.China discloses buying spree in US firms
Posted on 02/11/2010 1:23:42 AM PST by myknowledge
China's giant sovereign wealth fund revealed it has accumulated stakes totalling $US9.6 billion ($A11.1 billion) in major US companies including Coca-Cola, Apple and Goodyear following a buying spree last year.
Most of the stakes are small, reflecting China Investment Corp's strategy of avoiding politically sensitive acquisitions. But they highlight its growing presence in global markets as it invests a portion of Beijing's $US2.4 trillion ($A2.78 trillion) in foreign reserves.
The holdings were disclosed Friday in a filing with the US Securities and Exchange Commission that listed shares traded in the United States.
CIC, one of the world's biggest investment funds, was launched in September 2007 with $US200 billion ($A231.27 billion) in capital to earn a better return on Beijing's reserves.
One-third of its capital was earmarked for investment abroad, and the fund has bought minority stakes in mining, oil and financial companies.
The biggest holding in CIC's disclosure is $US3.5 billion in Canadian mining company Teck Resources Inc, an investment that was previously announced.
CIC has expanded cautiously abroad, trying to avoid a repeat of the political uproar in Washington that followed state-owned CNOOC's 2005 bid to buy US oil and gas producer Unocal Corp.
CNOOC Ltd withdrew its bid after some US lawmakers complained the sale might jeopardise national security.
The fund has said it plans to be a passive investor, holding minority stakes in foreign companies to avoid arousing political opposition.
That strategy is reflected in its disclosure, which includes small holdings in dozens of companies, including $US353.8 million ($A409.11 million) in Visa Inc, $US6.3 million ($A7.28 million) in Apple Inc, $US9 million ($A10.41 million) in Coca-Cola Co and $US1.4 million ($A1.62 million) in Goodyear Tire & Rubber Co.
It also listed a $US1.7 billion ($A1.97 billion) stake in Morgan Stanley, which CIC bought in June when the investment bank raised money to repay US government bailout funds.
CIC also agreed in 2007 to pay $US5 billion ($A5.78 billion) for a non tradable 9.9 per cent share of Morgan Stanley, but that did not appear in the latest disclosure.
Beijing keeps a big share of its reserves in safe but low-yielding US Treasury securities and other American government debt.
But communist leaders worry that they need to earn more to pay for pensions and other social programs in a rapidly aging society where many people still live in poverty.
CIC was the target of criticism at home after the value of some of its early investments in Morgan Stanley and private equity fund Blackstone Group plunged when the global financial crisis hit in 2008.
In its first annual report, CIC said in August it lost 2.1 per cent on its global portfolio in 2008 but defended that as a strong performance compared with heavy losses suffered by other sovereign wealth funds.
CIC says it did better in 2009 because it bought assets at lower prices as markets were recovering.
We will be a nation of debt slaves before the democrat party is through looting plundering our nation’s wealth.
U.S. Capitalism for toxic toys.
When I was younger I never thought I’d see the day when I would be buying communist made products. Now I would like to see the day when I don’t. Chicom products are everywhere in America. A day shopping without commie products everywhere would be like a fantasy come true.
I’d rike to buy the world a Coke...
Ahhh...25 yrs ago the Japanese were doing the same thing. They regretted it. Same same for the Chicoms...they’ll regret it also.
It has all the feel of a march on Stalingrad. The first flakes of snow are starting to fall...
They can buy my company.... no offers yet. I can always start another, and if they have money they can buy more, but they can not buy me.... Obama maybe.