CIC Reveals US Investment Portfolio

Ashby Monk

Apparently, the CIC just filed their first 13-F disclosure with the U.S. Securities and Exchange Commission. It’s a remarkable development, as it offers some insights into both the improving standards of the CIC’s internal governance and also offers a glimpse into the SWF’s “secretive” international portfolio. Normally, I’d have a lot to say about this, but it seems Rachel Ziemba beat me to it. Here are some highlights from her extensive analysis:

“The move is significant both from a financial disclosure perspective, showing as it does the CIC’s continued commitment to disclose information about its portfolio in line with other institutional investors (13-F’s are required of investment managers managing over US$100 million in assets, and report their U.S. long positions, including options and shares), but also because it allows a glimpse into a part of the Chinese government’s foreign asset portfolio.”

“Beyond, three large stakes in Teck Resources (US$3.4 billion at the end of 2009), Morgan Stanley (US$1.7 billion) and Blackrock (US$0.7 billion), the exposures to individual stocks are relatively small.”

“Finally, from a governance perspective, this illustrates that the CIC continues to be at the forefront of disclosing its holdings meeting legal obligations. A cursory search of the SEC database suggests that most Middle Eastern funds do not yet seem to make such filings, which are perhaps made by their external managers.”

“This underscores the importance the CIC and China’s political leaders seem to have put on complying in their own way with the Santiago principles, the voluntary code of practice for sovereign wealth funds. Doing so, should ease concerns about the investment management approach allowing regulators to focus on those investments that might pose national security or competition concerns.”

See the whole article here.

6 Responses to “CIC Reveals US Investment Portfolio”

  1. 1 rien huizer February 9, 2010 at 6:57 am

    Unsurprising that the domestic portfolio (the financial sector holding company role) continues to dwarf the real investment portfolio (which is still relatively small.
    (Q: how would a similar report by SAFE look?). The good thing is that the actual investment activity in listed US stock (though tiny) appears disciplined and unremarkable..Not all that different from what SAFE was supposed to be doing before CIC got the limelight (mainly via HK if I remember correctly). Did CIC replace SAFE? Are these portfolios cumulative? What if SAFE sells stock A and CIC buys it?

  2. 2 Ashby Monk February 9, 2010 at 7:41 pm

    Great questions, Rien. I was surprised to see such a disciplined, portfolio based approach.

    • 3 MMcC February 10, 2010 at 12:20 am

      Remember what a 13-F doesn’t cover: fund investments, money market funds, PE and a long list of other things. Moreover, as Blackstone doesn’t appear on the form – it’s actually held through a shell owned by a subsidiary called China Jianyin – it’s not entirely clear what else CIC might hold in the US, indirectly. I’m leaning towards the view that the majority of the US stock holdings were acquired when CIC’s risk appetite was still just a faint pang. The majority of the exposure – and the real return-generating effort – is likely to have been achieved through mandates. Of course, since we can’t date the purchases, that’s a pure guess.

      • 4 Ashby Monk February 10, 2010 at 3:58 pm

        That’s very true, Mike. You really raise the original concern among US policy folks; that SWFs will use PE structures or shell companies to acquire large stakes in domestic companies without anybody knowing about it.

  1. 1 Economic news headlines | Money Supply | Trackback on February 9, 2010 at 1:13 pm
  2. 2 Where Are CIC’s International Assets? « Oxford SWF Project Trackback on March 3, 2010 at 4:07 pm

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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