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Flush with cash despite the global
economic downturn, China's sovereign wealth
fund quietly bought more than $9 billion
worth of shares last year in some of the
biggest American corporations, including
Morgan Stanley, Bank of America and
Citigroup. Although most of the stakes were small, the China Investment Corporation, the government's $300 billion investment fund, now owns stock in some of the best-known American brands, including Apple, Coca-Cola, Johnson & Johnson, Motorola and Visa. The detailed list, which contained holdings totaling $9.6 billion as of Dec. 31, was disclosed Friday in a filing with the Securities and Exchange Commission; it lists stakes only in companies traded in the United States. The filing offers a glimpse of how China is trying to diversify its more than $2 trillion in foreign currency holdings with stock, rather than investing almost entirely in United States Treasury bonds and other debt securities issued by governments and by government-sponsored enterprises like Fannie Mae. Prime Minister Wen Jiabao of China and other officials have repeatedly expressed worry about how the country's holdings of Treasury securities could be hurt by inflation or by mounting United States debt. By buying the securities of international companies, China is trying to spread its fast-growing wealth more widely. It is also seeking to acquire strategic stakes in companies that could feed its hungry economy with a range of commodities. The China Investment Corporation, already one of the world's largest sovereign funds, was formed in 2007 with about $200 billion. It now has assets of nearly $300 billion and, according to state-run news media, is expecting another large injection of funds. A spokeswoman for the corporation, which is based in Beijing, did not return e-mail messages or phone calls seeking comment. But analysts said the filing showed that the fund had invested only a small portion of its $300 billion in American stocks, and the fund seemed to be following a cautious strategy to diversify globally after initially having put its biggest investments into shoring up the capital of Chinese banks. ''This is still a relatively small amount compared to the total size of the fund,'' said Chang Chun, a professor of finance at the China Europe International Business School in Shanghai. The sovereign wealth fund got off to a rocky start in 2007 and early 2008 by acquiring a $3 billion nonvoting stake in the American private equity firm Blackstone and paying $5 billion more for a 9.9 percent stake in Morgan Stanley. Shares of both companies plummeted in 2008 during the financial crisis, leading to a storm of criticism directed at the wealth fund. But analysts say the fund performed well in 2009, particularly because it was buying aggressively as the market recovered. Exactly when the investment corporation bought the shares of various companies was not disclosed in the filing. Its acquisition of nonvoting units of Blackstone and its early stake of preferred shares in Morgan Stanley are not listed in the filing, apparently because they are not traded equities. The filing indicates that the corporation owns about $19 million worth of Bank of America stock, close to $30 million worth of Citigroup shares and about $333 million worth of shares in Visa, as well as holdings in various index funds. The fund's largest listed holdings were $1.7 billion worth of shares in Morgan Stanley and nearly $650 million worth of shares in BlackRock, the New York money management fund. |
