China has lost tens of billions of dollars of its foreign
exchange reserves through an ill-timed move into global equities
just before world markets collapsed last year, the Financial Times
reported, citing analysts and people familiar with the
operations.
The State Administration of Foreign Exchange, or SAFE, which
manages the reserves, began betting on global stocks early in 2007
and carried on doing so at least until the collapse of U.S.
mortgage finance providers Freddie Mac (FRE) and Fannie Mae (FNM)
in July 2008, the FT reported the analysts and people as saying on
its Web site Sunday.
By then, SAFE had already moved well over 15% of the country's
$1,800 billion of reserves into assets such as equities and
corporate bonds, according to the people familiar with its
strategy.
SAFE doesn't publicly disclose its holdings. Brad Setser, an
economist at the Council on Foreign Relations in New York,
estimated the losses could exceed $80 billion, the FT reported.
Full story:
http://www.ft.com/cms/s/0/11fa4136-119f-11de-87b1-0000779fd2ac.html.