Photo courtesy of CFP
With the spread of the global financial crisis, the State Administration of Foreign Exchange (SAFE), which holds trillions of dollars in foreign exchange reserves, is unwilling to be lonely, and frequently makes moves on Wall Street in CIC. According to reliable sources, following the $2.8 billion acquisition of a 0/.6% stake in French oil company Total/Kloc-0, it was recently reported that China Huaan Investment Co., Ltd., a Hong Kong subsidiary of SAFE, has acquired a 0/%stake in BP, holding a value of about $2 billion.
Some experts in the industry said that the establishment of CIC and the corresponding divestiture of foreign exchange assets objectively constituted the competitive relationship between SAFE and CIC in overseas portfolio investment, which will inevitably accelerate the overseas exploration of SAFE.
Safe frequently makes overseas moves.
News of safe's overseas investment keeps coming out. According to insiders, as early as 10 years ago, in order to help manage China's rapidly growing foreign exchange reserves, SAFE kept some investment institutions in Hongkong and Singapore.
These branches are basically hidden from public view. So far, they have been focusing on investing China's foreign exchange reserves in safe and liquid assets such as US Treasury bonds.
In 2008, the news that SAFE purchased overseas assets kept coming out. According to the Financial Times, at the beginning of this year, a subsidiary of China's State Administration of Foreign Exchange (State) bought a small number of shares in three of Australia's four largest banks. On April 4th, according to the Financial Times, SAFE spent 654.38+08 billion euros (about 2.845 billion US dollars) to acquire 654.38+0.6% shares of Total, the fourth largest oil and gas company in the world.
On April 15, BP's spokesman in charge of global investor relations confirmed to the media that a company under safe (China Huaan Investment Co., Ltd., registered in Hong Kong) had purchased nearly 1% of the shares of BP. If the market value of BP on April 15 is about 200 billion US dollars, Huaan Investment currently holds nearly 2 billion US dollars.
Safe's previous investments have been questioned and worried by overseas about the transparency of China's sovereign wealth funds. However, BP's position is more enlightened, saying that BP is a listed company and welcomes all investors.
The pressure of huge foreign reserves to accumulate wealth management
"According to the State Council's" Sanding Plan ",one of the main responsibilities of SAFE is to operate and manage the national foreign exchange reserves in accordance with regulations. All along, ensuring liquidity in an emergency has been placed at the top of the management of foreign exchange reserves of SAFE, that is, investing China's foreign exchange reserves in low-yield, high-liquidity and safe international financial assets, especially US Treasury bonds, to ensure that foreign exchange reserves can cope with exports, repay foreign debts, maintain exchange rate stability and prevent speculative shocks. " Guo Tianyong, director of the China Banking Research Center of the Central University of Finance and Economics, said that under the pressure of the sharp depreciation of the US dollar, SAFE may look for new countermeasures.
"Obviously, in the case of the continuous depreciation of the US dollar, the foreign exchange management strategy of SAFE has begun to change, and the foreign exchange reserve department has obviously accelerated the pace of investing in high-yield products." Guo Tianyong said that SAFE's huge foreign exchange management talent system will soon help it find investment opportunities.
Huge foreign exchange reserves are the pressure to manage the wealth of a big country. Based on China's foreign exchange reserves of US$ 65,438 +0.528 trillion at the end of last year, the US dollar fell by 2.6% compared with major international currencies in the past month. If it is assumed that 90% of China's foreign reserves are US dollars, it will evaporate US$ 35.7 billion in the past month, which is equivalent to four times of China's trade surplus in February. Some professionals compare it to China's loss of four aircraft carriers every month.