BEIJING, Oct 10, (KUNA): Kuwaiti Minister of Finance Mustafa Al-Shimali on Monday inaugurated Kuwait Investment Authority (KIA) Beijing Representative Office, marking a significant milestone in Kuwait’s long-term strategic investment plan in the world’s second-biggest economy.
The inauguration ceremony was attended by hundreds of Chinese and foreign prominent businessmen, as well as diplomatic corps stationed in Beijing. Kuwaiti Ambassador to China Mohammad Al-Thuwaikh Consul General in Hong Kong Bader Al-Tunaib were also present.
Located in the heart of business district in the Chinese capital, Kuwait Investment Beijing Representative Office (KIRO) will serve as the sovereign wealth fund’s on-the-ground presence in China to explore opportunities for the KIA head office to review. It is KIA’s first ever overseas office since the establishment of the Kuwait Investment Office in London in 1953.
In his speech addressing the guests, Al-Shimali, who doubles KIA Chairman, said Kuwait and China have enjoyed relations based on mutual respect and cooperation since the two nations established diplomatic ties in 1971.
“This culminated in the landmark visit of HH the Amir of Kuwait Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah to Beijing in 2009, when the two countries agreed to deepen bilateral cooperation in economic, trade, energy, infrastructure and finance sectors,” the minister said.
Importance
According to the minister, KIA, which manages country’s oil generated-assets, realized the importance of investing in China and the Far East years ago.
“The agreements signed in 2009 laid down the basic ground work for such investments, and one of the results of this is the establishment of KIA’s first ever representative office in Beijing,” Al-Shimali said.
Pointing out that Kuwait was the first Gulf Cooperation Council (GCC) country to recognize China and to have the Chinese Embassy located in Kuwait, Al-Shimali said: “In the 1970s, Kuwait’s Petrochemical Industries built a fertilizer plant in China. Also, in the 60s and 70s, Kuwait Fund for Economic Development funded the construction of an airport, dams, highways and 34 other projects worth more than $850 million in China.” “Today, we are working to build a joint $9 billion oil refinery in Guangdong Province, which will further cement the strong ties between our two countries,” he noted.
Statistics show that bilateral trade volume between Kuwait and China reached $8.5 billion last year, up by 68 percent from the previous year.
“We hope that the trade between our two countries will further strengthen and that this figure will continue to increase and bring prosperity to both of our countries,” the minister concluded.
For his part, KIA Managing Director Bader Al-Saad underscored Kuwait’s fast growing presence in China and the fund’s confidence in the future business opportunities.
“Ten years ago, KIA’s China exposure was only in Hong Kong. Five years ago, we started investing in the Mainland as well as increased our investments in Greater China. From $2.2 billion, our investments have grown by nearly five times to $10 billion,” Al-Saad revealed.
As for Mainland China alone, KIA’s investments have jumped from zero to $5.6 billion in the past five years, he said.
During this time, KIA has participated as cornerstone investors in Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China, and most recently in CITIC Securities, according to Al-Saad.
Al-Shimali also touched on KIA’s investment strategy, saying, “As a global and long-term investor, KIA seeks investments in high growth economies in all continents of the world, including value investments in developed economies.”
As for an impact on Kuwait’s investments from the eurozone debt crisis and global fiscal challenges, the minister said KIA is able to tolerate and accept the high volatility in the markets due to the nature of the fund’s investment horizon. “As a long term investor, KIA continues to look for value investment opportunities globally,” he added.
Asked about a potential purchase of government bonds in the troubled eurozone, such as Italian bonds, Al-Shimali said, “We are open to any investment opportunities in all parts of Europe as long as these investments meet our risk parameters and if they fit within our investment criteria.” The minister arrived in Beijing on Saturday to hold talks with the Chinese financial leaders, including Finance Minister Xie Xuren and Yi Gang, Deputy Governor of the People’s Bank of China and administrator of the State Administration of Foreign Exchange.

“It is an honor for KIA to be associated with such remarkable leading institutions,” he pointed out.
Cornerstone investors are a handful of elite institutional investors who are guaranteed shares early in initial public offerings (IPOs) in exchange for a pledge to hold the stocks for a period.
KIA has submitted its application in China to be considered as a Qualified Foreign Institutional Investor and requested for an allocation for $1 billion.
Al-Saad went on to say that KIA is a stable, reliable and dependable partner with a long term investment horizon. “We do not exploit short term gains, and our actions during the recent global financial crises are the best proof,” he affirmed.
KIA, an investment arm of the Kuwaiti government, has a well-diversified investment portfolio with stakes in a wide range of companies and institutions around the globe.
The Kuwait government realized the need of investing surplus oil revenues to reduce its reliance on oil resource about 60 years ago, which was achieved by establishing the Kuwait Investment Board in London in 1953, eight years before Kuwait’s independence.
In 1982, KIA was established to take over the responsibility of managing Kuwait’s assets from the Finance Ministry. KIA currently manages two main funds — the General Reserve Fund and the Future Generations Fund. Kuwait transfers 10 percent of oil revenue into the Reserve for Future Generations each year.
KIA is a long term investor and the in-house investment management team covers equities, fixed income, treasury, private equity and property.