'China' fund raises stakes in Japan firms

OD05 Omnibus, an investment fund widely believed to be a Chinese government investment vehicle, has been increasing its stakes in Japanese companies including Toyota and Honda, a report said Sunday. By the end of March, the OD05 Omnibus fund was the largest shareholder for 174 Japanese firms, the highest level ever recorded, the business daily Nikkei reported, citing its own survey of listed companies. It estimated the total market value of the fund's stock holdings in Japan at about 3.58 trillion yen ($45 billion), also a record. The report, which highlights growing China-Japan economic ties, comes after China's sovereign wealth fund China Investment Corporation (CIC) reportedly said it will no longer buy European government debt. CIC chairman Lou Jiwei told the Wall Street Journal this month that the giant fund has scaled back its holdings of stocks and bonds in Europe, saying "there is a risk that the euro zone may fall apart and that risk is rising." The ODO5 Omnibus, which is reportedly based in Australia, is established as an investment trust and its owner is not known. However, it is seen by market players as backed by CIC and charged with helping manage China's foreign currency reserves of more than $3 trillion -- the world's largest. The fund's portfolio includes 1.9 percent of Toyota Motor's total outstanding stock, making itself Toyota's ninth-largest shareholder, and 2.2 percent of Honda Motor's total outstanding shares, it said. It also holds 1.9 percent of shares in camera maker Nikon, and it has also been buying shares of construction machinery maker Komatsu and Nissan Motor, Nikkei said. China, Japan's largest trading partner, in March gave approval for Japan to buy its government bonds, a move that analysts said appeared to be the first time a major economy had bought government bonds directly from Beijing. Japanese officials hope the bond purchasing programme will curb the yen's appreciation, caused by China's demand for the yen in order to buy shares in Japanese companies via purchases such as by its funds, the Japanese daily Yomiuri Shimbun has reported.