China Investment Corporation has sold off most of its holdings in the world’s biggest asset manager, BlackRock, Inc. (NYSE:BLK), Financial Times reported Monday. CIC is planning to reduce its stake in international financial institutions. The $482 billion Chinese wealth fund had reportedly purchased a 3 percent stake in BlackRock for $1 billion, at a discounted rate in 2009, the FT said. BlackRock stocks are currently trading at $176.37 per share, putting its market value at $$30.5 billion. However, CIC never made any official statement about its stake in BlackRock, Inc. (NYSE:BLK).
CIC incurred a 4.3 percent net loss on its global investment portfolio of $150 billion last year, which proved to be the worst year for the fund in terms of performance, primarily due to volatile financial markets. CIC has doubled its investment in hedge funds, private equity, and direct investments to 43 percent of its total portfolio since last year.
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
Even after the stake sale, CIC and BlackRock, Inc. (NYSE:BLK) are going to launch a $2 billion joint investment fund, China Global Opportunities Fund (CGOF), by the end of this year. CIC has already committed $500 million for the joint fund.
China Investment Corp. has also sold off its stakes in The Blackstone Group L.P (NYSE:BX) and Morgan Stanley (NYSE:MS), suffering losses on both, sources told the Financial Times.
China Economic Indicators Disappointing
Chinese economic growth has further decelerated. HSBC Holdings plc (LON:HSBA) (NYSE:HBC) said that its PMI has been declining for a straight ten months, and fell to 47.6 in August, from July’s 49.3. Index numbers below 50 on the 100-point scale represents contraction. Export orders are declining and manufacturing firms are firing workers at the fastest rate in 41 months.
“Beijing must step up policy easing to stabilize growth and foster job market conditions,” says Hongbin Qu, HSBC’s China economist. The country’s economic growth rate has fallen to a three-year low of 7.6% in the second quarter.
The Chinese government is pumping more funds into the economy and has lowered interest rates twice in the second quarter alone, but the indicators are falling despite aggressive government efforts. Wen Jiabao has promised to support the struggling exporters. However, there is little he can do to boost exports amid a slumping U.S. recovery and the Eurozone crisis.