CIC is biggest buyer of Asian equities

Jun 10, 2010

Thanks to a strategic stake in ICBC, China Investment Corporation has become the biggest owner of Asian stocks, although most secondary market buying has been by American investors, says Ipreo.

China Investment Corporation was the biggest buyer of Asian equities in 2009, buying a net $98 billion last year and now owning $211.8 billion worth, says US research firm Ipreo, which bases its data on public filings dated from the fourth quarter.

However, most of the biggest buyers of Asian equities in 2009 were American. Of the top 10 buyers, seven were from the US, led by Capital Research Global Investors ($2.2 billion net bought).

CIC's enormous position reflects its taking strategic stakes in public companies, rather than buying shares on the secondary market.

Brian Matt, director of data strategy and analytics at Ipreo in New York, says CIC has had a huge stake in ICBC as a strategic investor, which was transformed into an institutional position valued at $94 billion when the Chinese bank listed in Hong Kong in October. So while technically the sovereign fund was not such a huge buyer in 2009, it did indeed become the biggest owner of public Asian stocks.

"Strategic holdings would normally be excluded from Ipreo institutional investment analyses," Matt says. "However, in this case, this is not applicable." Furthermore, public information on CIC's acquisition of ICBC shares, via its subsidiary Central Huijin, is incomplete.

The $211.8 billion owned by CIC now includes both the ICBC stake (which Ipreo currently values at $86 billion) and a $109 billion interest in China Construction Bank. CIC may also hold other equity positions that have not been disclosed.

Besides Capital Research, other big American buyers of Asian equities in 2009 include Kohlberg Kravis Roberts, Artio Global Management, Wellington Management, AllianceBernstein, Thornburg Investment Management and MFS Investment Management.

Singapore state investment fund Temasek Holdings and Japan's Nikko Asset Management round out the top 10 buyers.

Americans and Japanese also comprised the biggest sellers too, although the net numbers are much smaller. Last year's top seller of Asian equities was New Jersey Division of Investment (-$1.8 billion), while other US-based sellers were the US division of Aberdeen Asset Management, GMO, William Blair & Co, Morgan Stanley Investment Management and Goldman Sachs Capital Partners.

Other sellers include Nomura Asset Management, the Japan division of Fidelity Investments, Japan-based MU Investments and China International Capital Corporation.

Amid this activity, the top 10 overall biggest holders of Asian stocks is a mixed bunch. CIC's buying spree has pushed it to the top, while Temasek is second ($77.5 billion), with China's National Council of Social Security Fund also making the top 10 ($25.7 billion).

There are only two American firms in the top 10 holders: Capital Research ($30.7 billion) and Fidelity Management & Research (the holding company, with $23 billion). Norway's sovereign wealth fund also makes the top 10: Norges Bank Investment Management ($24.1 billion).

The other four major owners of Asian stocks are from Japan: Nomura Asset Management ($28.4 billion), Daiichi Mutual Life Insurance ($26.8 billion), Fidelity Investments Japan ($21.0 billion) and Nikko AM ($18.1 billion).

Overall, the fourth quarter of 2009 saw Asian investors add almost 13% to their existing holdings in the region, says Ipreo. North Americans added 2.8%, Europeans less than that.