By Miyoko Ishigami
BEIJING, Oct 18 (KUNA) -- Kuwait Investment Authority (KIA) was recently granted a CNY 6.5 billion (USD 1 billion) license by China's central bank to invest in the domestic interbank bond market, KIA Managing Director Bader Al-Saad said Thursday.
The People's Bank of China launched a program in August 2010 to allow selected foreign financial institutions and central banks to buy bonds on China's interbank market under a preset quota, in a move aimed at promoting the internationalization of Chinese currency.
In an interview with Kuwait News Agency (KUNA), Al-Saad said KIA has also fully invested an initial quota of USD 300 million in the Chinese securities market after Beijing's approval in March.
"We had originally requested for an allocation of USD 1 billion to invest directly in China's A-graded shares. Initially, we were granted USD 300 million, which has been fully invested as of September," said Al-Saad, who is currently visiting Beijing. USD 1 billion is the maximum quota that a single qualified foreign institutional investor can obtain from State Administration of Foreign Exchange.
"KIA will request for the balance of USD 700 million allocation from the Chinese authorities shortly, which we hope will be granted in due course," he added. Meanwhile, Al-Saad downplayed the impact of China's slowing economy on KIA's business here. "China has still been growing at 7.4-8.0 percent per year whereas the developed economies are growing at an average of 1 percent. As a long term investor, we base our decisions on numerous factors which show us the potential for a region, country, sector and industry future potential in the coming years," he said.
"KIA increases its investments when we find assets in our target market trading at attractive valuations. We continue to remain an investor regardless of current market conditions. In fact, we have increased our investments in the region," he asserted.
KIA, an investment arm of the Kuwaiti government, established its representative office in Beijing known as KIRO in October 2011. According to KIRO Chief Representative Fahad Al-Shatti, the Beijing office has been critical in promoting Kuwait's sovereign wealth fund inside Greater China as well in the Far East, in addition to being a bridge for Chinese companies to expand their business in Kuwait.
"This office has been a vital listening post for KIA in one of the fastest growing regions in the world. KIRO is, at this time, a representative office. Once our operations are expanded and appropriate skills are installed, the possibility is to eventually expand the role of this office into investments as well," Al-Shatti told KUNA.
Underscoring KIA's increasing investments in China over the past year, Al-Shatti said, "In addition to our core holdings in Industrial and Commercial Bank of China, Agricultural Bank of China and AIA, we have recently become a cornerstone investor in other China and Far East entities, such as CITIC Securities and Asia's biggest hospital operator IHH Healthcare of Malaysia." Cornerstone investors are a handful of elite institutional investors who are guaranteed shares early in initial public offerings (IPOs) in exchange for a pledge to hold the stocks for a period.
KIA, which manages Kuwait's oil generated-assets, has been also placing off-shore yuan deposits through Hong Kong financial institutions, KIRO chief added. (end) mk.asa KUNA 180908 Oct 12NNNN