Mi copio l'art del WSJ che poi non me lo lascia vedere piu'......
By LINGLING WEI And CAROLYN CUI
China's currency-reserves manager has set up a New York operation to invest in private equity, real estate and other U.S. assets, according to people with knowledge of the move.
The move by the State Administration of Foreign Exchange, or SAFE, which oversees the world's largest stockpile of foreign-exchange holdings, comes as it steps up diversification
away from U.S. government debt, the people said.
The agency recently established the operation on Fifth Avenue in Manhattan to make the alternative U.S. investments. The new office is separate from one the agency has been running for years in the U.S. that focuses on buying government debt and to a lesser extent corporate bonds and asset-backed securities, the people said.
Earlier
Feb. 2013: China Quietly Invests Reserves in U.K. Properties
The move comes amid growing expectations in the marketplace that the Federal Reserve may begin in coming months to unwind its $85 billion-a-month bond-buying program—known as quantitative easing, or QE—meant to spur the U.S. economy. A Fed retreat from the program would reduce demand for the bonds, putting downward pressure on their value.
A large chunk of Chinese agency's $3.4 trillion foreign-exchange portfolio is parked in U.S. government bonds. China won't say how it invests its foreign-exchange reserves, which have grown rapidly over the past decade, but the latest data from the U.S. Treasury Department show that China slightly reduced its holdings of U.S. government debt in March by 0.1%, to $1.25 trillion.
The Wall Street Journal reported earlier this month that Fed officials have mapped out a strategy for winding down the bond-buying program, though the timing is still being debated.
"The likely Fed exit from QE makes it more urgent for SAFE to branch out beyond its traditional role of mainly investing the foreign-exchange reserves in U.S. Treasurys," said Peng Junming, a former SAFE official who now runs his own investment-management firm in Beijing, Empire Capital Management LLP.
The new effort is unlikely to reduce China's dependence on Treasurys soon, but the attempt represents part of a long-term trend as China tries to reduce its hoard of dollar debt.
The New York operation has about a dozen staffers. Officials in recent weeks have met with Wall Street banks about potential investment opportunities, the people said, though it wasn't clear whether any deals have been signed so far.
The operation hasn't been allocated a fixed amount of money to invest but gets funds from the exchange on a deal-by-deal basis, according to the people.
The new endeavor in the U.S. comes as the agency has stepped up investing in hard assets such as property and infrastructure in the U.K. market. Since May, a U.K.-registered entity owned by Chinese agency has invested more than $1.6 billion in at least four deals, including a water utility, student housing, and office buildings in London and Manchester, according to data providers tracking property deals as well as disclosures by the companies that received the investments.
The agency in the past has mostly kept a low profile, taking small positions in blue-chip stocks or allocating funds to third-party asset managers to invest on its behalf. But in pursuit of higher returns, it is also becoming more active in taking direct ownership stakes. That mirrors the strategy of China Investment Corp., the more-active investor of the country's sovereign wealth. CIC, which is run separately from SAFE, was established in 2007 to enhance the returns on China's reserves. Its assets were valued at nearly $500 billion at the end of last year. CIC also has sped up its investments in alternative asset classes.
Competition between SAFE and CIC "has sharpened a little bit in the U.S.," said Derek Scissors, senior research fellow at the Heritage Foundation, a conservative think tank in Washington. As SAFE diversifies its U.S. holdings, "they might think they have to be more organized on the ground here to find deals," he said.
China remains the largest foreign creditor to the U.S., largely the result of Beijing's policy to encourage exports by holding down the value of the Chinese yuan. It does this by buying dollars from exporters in exchange for the yuan, and using those dollars to buy Treasurys—the only market in the world deep and liquid enough to support buying on such a scale.
Chinese leaders have publicly fretted about the safety of China's U.S. Treasury holdings, and Beijing has listed preserving and enhancing the value of its foreign-exchange reserves as a top financial priority.
In the past year, SAFE has sought to diversify its dollar-denominated portfolio by buying some European assets and Japanese stocks, according to the people familiar with its investment strategy.
SAFE's non-bond investments in the U.S. total $4.5 billion, estimates Mr. Scissors of the Heritage Foundation, mostly through stakes in private equity funds and similar investments. Last year, for example, SAFE invested $500 million in a real-estate private-equity fund managed by Blackstone Group BX +0.73% LP.
SAFE's initial foray into private equity turned out to be an embarrassing failure for China. That involved a $2.5 billion investment in 2008 in a fund run by U.S. private-equity firm TPG. SAFE suffered losses after the fund's subsequent investment in Washington Mutual Inc., WMIH +5.00% the largest U.S. savings and loan firm at the time, was wiped out following the lender's failure.
