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China Said to Study Investing More Reserves in European Property

Oct. 16 (Bloomberg) -- China’s agency that manages the nation’s $3.66 trillion of foreign-exchange reserves is looking to make more investments in European property, two people familiar with the situation said.

The State Administration of Foreign Exchange, seeking to diversify the nation’s investments, is looking at real estate and infrastructure projects with a focus on the U.K., France, Germany, Poland and the Czech Republic, said the people, who asked not to be identified as they weren’t authorized to speak publicly about the matter. Valuations for such projects are currently at an attractive level, they said.

The agency is considering investing more of the world’s biggest reserve stockpile in Europe while wrangling over the U.S. government’s borrowing limit raises the risk of a default in Treasury holdings that stood at $1.28 trillion in July. China Deputy Finance Minister Zhu Guangyao said yesterday that the U.S. must take “concrete measures” this week on its debt.

The safety of investments is the foreign-exchange agency’s top priority, the people familiar with the matter said.

China’s foreign-exchange reserves rose last quarter by the most in more than two years as signs of a growth rebound stoked capital inflows, according to data the People’s Bank of China released on Oct. 14. The reserves rose from about $3.5 trillion at the end of June.

Gingko Tree Investment Ltd., identified by the Sovereign Wealth Fund Institute as a unit of SAFE, in January bought a 40 percent stake in UPP Group Holdings Ltd., the U.K.’s second-largest student-housing operator, a person with knowledge of the transaction said at the time.

SAFE is also among potential bidders for the Beaugrenelle shopping mall in Paris, Le Figaro reported yesterday, without citing anyone. The acquisition could be valued at at least 700 million euros ($945 million), according to the Oct. 9 report.

To contact Bloomberg News staff for this story: Steven Yang in Beijing at kyang74@bloomberg.net

To contact the editor responsible for this story: John Liu at jliu42@bloomberg.net

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