KIC gets permission to trade in Chinese stocks

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KIC gets permission to trade in Chinese stocks

Korea Investment Corp., the country’s sovereign wealth fund, received approval from Chinese authorities to invest in the world’s third-largest stock market, according to an official familiar with the matter.

The fund was granted a license in December under Qualified Foreign Institutional Investor, or QFII, status, said the official, who asked not to be identified ahead of an official announcement from Chinese authorities.

The fund, which applied for the license in 2010, is awaiting an investment quota from China’s State Administration of Foreign Exchange and will then decide on the size and timing of investments, he said.

Korea Investment Corp. is the second Korean fund to get the approval in the space of a week as investors in the nation seek to diversify assets and are looking to China, where economic growth is expected to outstrip the rest of the world. The National Pension Service, the country’s biggest investor, revealed on Monday that it also received a QFII license.

Korea Investment Corp., with $43 billion in assets as of last June, posted returns of 8.46 percent from bonds and stocks in 2010, down from 18.67 percent the previous year, according to the annual report. KIC was established in July 2005 to invest part of Korea’s foreign-exchange reserves overseas.

The National Pension Service aims to boost overseas investments to about 20 percent of its assets by 2016, up from 12.9 percent in November, the fund said.

The Shanghai Composite Index tumbled 22 percent last year, extending a 14 percent drop from 2010, on concern that increases in borrowing costs and Europe’s debt crisis will derail economic growth. The index’s 32 percent drop since 2009 makes it the worst performer among the world’s 15 biggest stock markets.

China has granted 121 foreign firms QFII status as of November, including Shinko Asset Management, Morgan Stanley Investment Management and Goldman Sachs Asset Management International.

China is forecast to grow by 9 percent this year, according to the International Monetary Fund. The IMF predicts developing economies in Asia will expand 8 percent in 2012, outpacing growth of 1.8 percent in the U.S. and 1.1 percent in the euro zone.

The Chosun Ilbo earlier reported Korea Investment’s winning QFII status, citing an unidentified official at Korea’s Ministry of Strategy and Finance.


Bloomberg

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