Europe’s financial turmoil has seen the Chinese government quietly pour tens of billions of US dollars into Japan’s stock market, analysts say, despite the two countries’ lingering historical animosity.
For years, the two Asian powerhouses have eyed each other suspiciously with frequent diplomatic spats flaring over territorial claims and longstanding disputes, largely stemming from Japan’s wartime record.
However, with economic ties improving and Europe in a debt crisis, an ever more practical Beijing is buying up shares of Japanese firms as it looks for safer places to park its mountainous foreign-exchange reserves, the world’s largest.
A fund known as OD05 Omnibus, widely viewed as linked to Beijing, was a major shareholder in 174 Japanese firms at the end of March, including names such as Toyota and Nikon, said a survey by the Nikkei Shimbun business daily.
The paper put the value of the fund’s Japan investments at a record ￥3.58 trillion (US$45 billion).
The survey showed the fund’s shareholdings have more than tripled since 2008, when the collapse of Lehman Brothers triggered an unprecedented shock to the global financial system.
The ownership of Omnibus, reportedly based in Australia, has never been publicly acknowledged.
However, dealers view it as being backed by China’s sovereign wealth fund, China Investment Corp (CIC, 中國投資公司), and charged with helping manage some of Beijing’s more than US$3 trillion foreign currency war chest.
“When Europe is in such financial turmoil, Beijing needs to diversify its investment destinations,” said Tsuyoshi Ueno, senior economist at NLI Research Institute in Tokyo.
“China has so much in foreign currency reserves and they need to invest it in blue-chip companies, Ueno added.”
CIC’s chairman has reportedly said the fund was scaling back its European equity and bond holdings, telling the Wall Street Journal this month that “there is a risk that the eurozone may fall apart and that risk is rising.”
Japan’s economy has struggled for years, but it is increasingly seen as a port in the storm for investors, while Europe struggles to rein in its finances and questions swirl about a solid recovery in the US.
Omnibus’ portfolio includes a 1.9 percent stake in Toyota, a 2.2 percent holding in rival automaker Honda, a 1.9 percent share in camera giant Nikon and a 2.5 percent stake in construction machinery maker Komatsu, the Nikkei survey said.
Recent Bank of Japan data showed that China has become a major holder of Japanese government and corporate debt, outpacing the US and Britain.
In March, China, which is Japan’s largest trading partner, approved Tokyo buying its government bonds, a move that analysts said appeared to be the first time a major economy had bought debt directly from Beijing.
The Asian powers have also started direct trading between the Chinese yuan and the yen to ease cross-border business, including corporate acquisitions, which have often been completed using US dollars.
The agreement — the yen is the only major currency other than the greenback to trade directly against the yuan — comes as Beijing continues its long-term bid to turn the yuan into a global unit rivaling the US dollar.
A Chinese fund manager said Omnibus quietly invests in a cross section of corporate Japan, but deliberately keeps its stake well below majority ownership.
However, “there is nothing wrong with the Chinese investment and it is not bad news for Japanese companies,” said Yasuyoshi Masuda, an economics professor at Japan’s Toyo University.
Japan should be wary of Chinese government investment in firms with links to the military or secret technology, but otherwise “Japan’s stock market should welcome foreign capital investment,” he said.
“It’s not like the Chinese fund owns more than 50 percent of a major Japanese firm,” he added.
This week’s undoing of the TerraUSD algorithmic stablecoin and its sister token, Luna, has ramifications for all of crypto. First, there is the immediate impact: The rapid collapse of a once-popular pair of cryptocurrencies sent a ripple effect across the industry, contributing to plummeting coin prices that wiped hundreds of billions of market value from the digital-asset market and stoked worries over the potential fragility of digital-asset ventures. Then there are the knock-on effects. In addition to delivering punishing losses to individual users and investment firms, the spectacular failure of a market darling like Terra threatens to have a cooling effect
China’s biggest chipmaker has cut its outlook for the second quarter, joining a growing list of manufacturers warning about the fallout from lockdowns aimed at containing the country’s worst COVID-19 outbreak in two years. Semiconductor Manufacturing International Co (SMIC, 中芯) estimates a month-long lockdown in Shanghai could spur component shortages and logistics tangles, and erase about 5 percent of its output in the second quarter. “We are trying our best to mitigate the impact on product delivery,” SMIC Chairman Gao Yonggang (高永崗) told analysts on a call yesterday morning. “We are still assessing the actual impact as many suppliers restart their
DISRUPTIONS: The war in Ukraine, China’s lockdown measures, rising interest rates and inflation have thrown a wrench into business plans made years in advance Samsung Electronics Co is talking with foundry clients about charging as much as 20 percent more for making semiconductors this year, joining an industry-wide push to hike prices to cover rising costs of materials and logistics. Contract-based chip prices are likely to rise around 15 percent to 20 percent, depending upon the level of sophistication, people familiar with the matter said. Chips produced on legacy nodes would face bigger price hikes, while new pricing would be applied from the second half of this year, they said, adding that Samsung has finished negotiating with some clients and is in discussions with others. Samsung’s decision
material SHORTAGE: Even as workers are about to return, Quanta lacks operating supplies, while Pegatron reported its lowest revenues in 11 quarters, the companies said Taiwan’s major Apple Inc supplier cut its outlook for the second quarter, joining a growing list of manufacturers warning about the fallout from lockdowns aimed at containing China’s worst COVID-19 outbreak in two years. Quanta Computer Inc (廣達電腦), which assembles MacBooks, expects a 20 percent quarterly fall in notebook shipments and a squeeze on margins this quarter due to the lockdown, a company representative said on Friday during an earnings call. The impact from supply chain disruptions could last until the end of the year, she said. The company’s Shanghai factory has been operating under tight restrictions since the middle of last month,