China Investment Corporation (CIC), the nation’s $200 billion sovereign wealth fund, is looking to stabilize global equity markets through investments in firms hit by the US sub-prime mortgage crisis, according to its chairman Lou Jiwei. He also said that CIC would spend one-third of its capital to acquire assets from China Huijin Investment Corporation (which controls the country’s top state-owned banks), another one-third to recapitalize the Agricultural Bank of China and China Development Bank, and the remaining one-third for overseas financial investments. Lou told a conference in Bejing that it would invest the majority of this money in publicly traded securities, with a smaller portion in alternative investments, but not in infrastructure assets. The fund will be fully operational from late Q1 2008.
Russia’s gas giant Gazprom will hike prices for natural gas in Ukraine, after it was forced to pay more for gas imports from Turkmenistan. There have previously been tensions between the company and Ukraine over gas supplies but the country’s acting minister of economy Anatoliy Kinakh has indicated that the nation will accept this increase, but will enact a corresponding hike in gas transit fees charged to Gazprom. Russia supplies 25% of Europe’s gas with Ukraine acting as transit for 80% of this supply. In a separate development, prime minister Yulia Tymoshenko sealed a coalition agreement with the NSD-Our Ukraine bloc, but the party of Volodymyr Lytvyn is staying out of the government for now.
Kosovo is set to declare independence in full coordination with the US and EU after final talks on the status of the territory ended in failure this week. The province’s ethnic Albanians demand independence from Serbia but Belgrade and Russia reject this. Analysts fear the region could be plunged into conflict once more if Kosovo declares independence unilaterally. (For analysis, please click here)
Pakistan’s former prime minister Benazir Bhutto has launched her party’s manifesto but suggested she may still boycott January 8 parliamentary elections. President Musharraf has vowed to end the state of emergency on December 16 after stepping down as head of the army this week. Bhutto’s Pakistan People’s Party is concerned over the fairness of the elections, with another leading opposition figure Nawaz Sharif calling on all parties to boycott the January elections.