Thread: Does anyone know what this means?

China's sovereign wealth fund said it expects to recoup $5 billion it invested in a U.S. money-market fund because it requested the money be withdrawn shortly before the fund froze redemptions.

China Investment Corp. said Wednesday it was no longer an investor in the Reserve Primary Fund when the fund suspended redemptions Sept. 16. CIC hasn't yet received the money back but expects to receive the full amount, it said in a statement on its Web site.

The fund "has confirmed in writing that it will return CIC's full capital and interest," the Chinese investment firm said. It said it was now a creditor rather than shareholder in the fund.

Reserve Primary couldn't immediately be reached for comment.

CIC said it has been in contact with the U.S. Securities and Exchange Commission, "highlighting the Fund's promise of full repayment to CIC and CIC's legal rights."

CIC was listed in regulatory filings as holding 11.13% of the Reserve Primary Fund's institutional class shares through a subsidiary as of Sept. 1, roughly two weeks before it froze redemptions.

The Reserve Primary Fund, the flagship of Reserve Management Corp., last month became the first money-market fund in 14 years to "break the buck," meaning its net asset value fell below $1 per share. It held $785 million of Lehman Brothers Holdings Inc. Commercial paper and medium-term notes when the investment bank filed for bankruptcy protection Sept. 15. The next day, after investors rushed to pull their money out the fund, it said its net asset value had fallen to 97 cents a share and suspended redemptions.

China Fund Expects to Recoup Reserve Investment - WSJ.com

Are the rich getting poorer?

The Reserve Management Corp., the creator of money-market funds, acknowledged that its largest and oldest fund held $785 million in commercial paper issued by Lehman that had become worthless with the brokerage’s bankruptcy last Monday. This exposed investors in the Reserve’s $62 billion Primary Reserve Fund to losses—the first time in more than a decade any money-market fund had reported seeing that—as net asset value (NAV) fell to $0.97 a share, or “broke the buck.”

Nowhere to hide: Money funds not such a safe harbor - Financial Week

More on this:

It may be hard to believe but the WSJ reports that Chinese sovereign wealth fund - China Investment Corp., "has applied to participate in the U.S. Treasury's temporary guarantee program for money-market funds." This at a time when Bloomberg reports that "China's foreign-exchange reserves rose to a world record $1.906 trillion, helping to strengthen the nation's finances as the credit crisis threatens to trigger a global economic slump."

I'm curious what MichaelR thinks of this.

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