Daimler AG (PINK:DDAIF) (ETR:DAI) (FRA:DAI) shares rose this morning on the news that China Investment Corporation might buy a stake in it. They fell shortly afterward after The Financial Times reported that an anonymous source said China’s sovereign wealth fund was actually not in talks to buy a stake in Daimler AG (PINK:DDAIF) (ETR:DAI) (FRA:DAI).
The initial report about negotiations between the fund and Daimler came from The People’s Daily. It said China Investment Corporation might buy between 4 and 10 percent of Daimler AG (PINK:DDAIF) (ETR:DAI) (FRA:DAI). The People’s Daily is the main publication of China’s Communist party, and it doesn’t usually report on investments which involve entities that are owned by the state unless they have already been announced officially. Daimler would not comment on the speculation, although it did say that it welcomed potential new investors.
This isn’t the first time it has been speculated that China Investment Corporation could buy a stake in Daimler. It has been speculated since late 2011 when media outlets in Germany were the first to report that an investment bank had been hired by Daimler to make a deal.
China Investment Corporation manages approximately $150 billion worth of assets overseas and restricts itself to taking only minority shares in foreign companies. That’s to circumvent publish concerns about political motivations being involved in its investments. The wealth fund said it invests in companies over the long term with a focus on financial gains. Since the global credit crisis, the agency has invested mostly in infrastructure and natural resources. At this point it has not directly invested in any automotive companies.
