China's NZ quest natural: expert

A report that China's state-owned wealth fund, the China Investment Corporation, has set aside $NZ6 billion to spend on New Zealand assets is not surprising, Craigs Investment Partners broker Peter McIntyre says.

The report on Thursday indicated CIC was looking to use some of its foreign exchange reserves to buy alternative assets outside its "normal mainstream" and was planning to use about 1.5% to buy New Zealand government bonds, companies or farming assets.

That put a spike in the dollar on Thursday, to an almost record high, which weakened a bit yesterday, Mr McIntyre said.

At 5pm yesterday the dollar was trading at US81.90c.

While about 75% of the world's economies were in recession or struggling, China was in good shape with "cash to burn".

It was looking maybe at the opportunity to invest in assets at low prices.

It was also looking at both food security and land security for its population in the future, he said.

It was also reported CIC was considering investing about 2% of foreign exchange reserves in Australia and was also possibly looking at assets in Portugal.

The move followed China-based Agria Corp taking control of rural services company PGG Wrightson last month.

The strength of the New Zealand dollar might also have coincided with the slight increase in payout from dairy giant Fonterra and a high benchmark set for next year as well, he said.

Financial statements on CIC's website showed, for the year ending December 31, 2009, it had total assets of $US332,394 million ($NZ405 million) and a net income of $US41,660 million.

 

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