China Reserve Fund Reportedly Buys Stakes in Australian Banks (MarketWatch) (04-01-2008)

HONG KONG (MarketWatch) -- According to a report, a subsidiary of the body overseeing China's massive $1.4 trillion reserve stockpile has purchased stakes in three leading Australian banks.

As reported by the Financial Times on Friday, A Hong Kong unit of the State Administration of Foreign Exchange bought stakes of less than 1% in Australia and New Zealand Bank and Commonwealth Bank of Australia and a 0.3% stake in National Australia Bank.

The investments were made during the last two months, and care was taken not to move the share prices or trigger mandatory disclosure requirements.

The stock holdings were accumulated by Hong Kong registered SAFE Investment Company, a wholly-owned unit of the body overseeing China's foreign reserves, the report said.

The Hong Kong unit is believed to be looking at additional investment possibilities in London.

Market observers said it was unusual for SAFE to invest in such deals given that China Investment Corp., a sovereign wealth fund established with money drawn from China's foreign exchange reserves, was expressly created for that purpose. The FT report suggested SAFE may be purchasing stakes in the Australian banks on behalf of CIC or as a part of a plan that would eventually see a merger between the two government-controlled bodies.

In Friday trading, shares of Australia and New Zealand Bank rose 0.3%, National Australia bank added 1% and Commonwealth Bank of Australia rose 0.6%.

You can read more here