COMMENT: Year of the Panda

Jan 1, 2011

China Investment Corporation’s involvement in a consortium buying part of Brazil-based BTG Pactual marks a shift into financial assets for China.

It has been an avid consumer of commodities, in particular Argentine oil, during a 2010 surge in volume of LatAm asset purchases by Chinese buyers.

We expect this trend to continue, broadening into portfolio investment. Indeed, CIC’s president Gao Xiqing says the sovereign wealth fund, which manages some $300 billion, will increase exposure to LatAm. The region’s borrowers are meanwhile getting more adventurous with funding diversification. And G3-based investors seek record exposure to fixed income assets denominated in emerging market currencies.

This should eventually translate into renminbi-denominated issuance, following the example of McDonald’s. The burger chain in 2010 launched an RMB deal of...

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