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China's Sovereign Fund Eyes Japan, Inpex: Times

Reuters
Sunday, 24 Feb 2008 | 9:40 PM ET

China's sovereign wealth fund plans to buy as much as $10 billion in Japanese stocks and may consider purchasing a large stake in oil and gas developer Inpex Holdings, Britain's Times newspaper said.

The $200 billion China Investment Corporation (CIC) may invest in a range of Tokyo-listed companies, including a "sizeable stake" in Inpex, the Times said in its online edition on Saturday, citing unnamed Japanese government sources.

The fund will first concentrate on Tokyo stocks and eventually move toward direct investments, such as real estate, the paper said, citing sources close to Japanese Financial Services Minister Yoshimi Watanabe.

The CIC will likely announce the appointment of a fund manager to monitor its Tokyo investments by the end of this month, the Times said.

Watanabe earlier this month met with a senior official from the CIC and said would he would be receptive to investment by the fund.

"I am sure he came to Japan because they are interested in investing in Japan, so I told him we will welcome it very much," Watanabe told reporters after meeting with CIC general manager Gao Xiqing almost two weeks ago.

Watanabe also said he and Gao did not discuss the timing, or potential targets, for any investment.

The potential investment would come at a critical time for Tokyo, the world's second-largest stock market. After hitting a seven-year high in early 2006, Tokyo's Nikkei 225 Average has since lost more than a quarter of its value.

Foreign investors, in particular, have aggressively sold Japanese equities due to concern about the domestic economy and the impact of the subprime crisis.

CIC Vice-President Jesse Wang said last month the fund had no plans to target Japan in particular and had no investment preferences for any one market.