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CIC favors banks and resources

CHINA'S sovereign wealth fund will raise stakes in the big three state-owned banks and is also keen to invest in natural resources assets, a senior official said yesterday.

China Investment Corp, the US$200-billion sovereign wealth fund, will continue to raise its holdings in the Industrial and Commercial Bank of China, the Bank of China and China Construction Bank, Executive Vice President Jesse Wang told reporters yesterday in Beijing. He said H-shares may also be among its investment options.

Central Huijin Investment Co, a unit of CIC, is the largest shareholder in the big three banks.

Central Huijin said in September it would buy shares in the lenders to bolster confidence in the Chinese mainland stock market. The Shanghai Composite Index shrunk 70 percent last year but gained 21 percent this year.

Central Huijin was estimated to spend 1.2 billion yuan (US$175 million) to raise its stakes in the three banks between September and November.

CIC may invest in "undervalued" commodity assets, joining other Chinese companies to ride on a seven-year low in prices. Commodities prices went on a roller-coaster ride last year. High prices collapsed in the second half of 2008 amid the spill-over of the financial turmoil.

CIC is turning to commodity assets after losing money in financial firms including Blackstone Group LP and Morgan Stanley. It is keen to invest US$3 billion in Fortescue Metals, Australia's third-biggest iron ore exporter, earlier media reports said.


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