Chinese sovereign fund holds $9.6b in US equities

Washington : China Investment Corporation (CIC), a $300 billion (Dh1.1 trillion) sovereign wealth fund based in Beijing, filed its first quarterly disclosure on US equity holdings, reporting that it owned stocks valued at $9.63 billion as of December 31.

The fund Friday filed what's known as a Form 13F, which the US Securities and Exchange Commission requires from all institutional investment managers with more than $100 million of US equities. Other sovereign wealth funds have begun filing such reports amid calls for more disclosure.

CIC, created in September 2007 through a $200 billion allocation of China's reserves, began stockpiling cash in US money-market funds after initial investments in companies such as Morgan Stanley and BlackRock declined in value.

Friday's filing shows that the Chinese company has resumed investing in US equities, primarily through index funds rather than individual stocks.

"China is diversifying among different US dollar-denominated assets," Rachel Ziemba, a senior analyst at Roubini Global Economics LLC in New York, which researches sovereign wealth funds, said yesterday in an interview.

"What we are seeing is a way to quickly gain exposure to these markets rather than doing a lot of due diligence" on individual companies.

China, the biggest foreign holder of US government debt, trimmed its holdings of Treasuries by $9.3 billion to about $789.6 billion during November, the largest cut in five months.

CIC invested about $10 billion in commodity producers worldwide during the second half of last year, according to data compiled by Bloomberg.

The SEC requires managers to report all holdings in stocks that trade on US exchanges, as well as options and convertible debt. The reports must be filed within 45 days of the end of each quarter.

Disclosed investments

According to CIC's report, three previously disclosed investments now comprise about 63 per cent of its US holdings.

These include a $1.77 billion stake in Morgan Stanley, the New York-based securities firm; a $3.54 billion interest in Teck Resources Ltd, Canada's largest diversified mining company; and $714 million of stock in BlackRock, a New York firm that is the world's largest money manager.

The filing shows that CIC has been buying exchange-traded funds that track stock indexes, economic sectors and commodity prices, such as the SPDR Gold Trust.