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Munich Re stake signals 'strategic shift' on reserves

By Li Xiang | China Daily | Updated: 2011-08-16 08:04

BEIJING - China's investment in German reinsurance company Munich Re Group is a sign that the country's foreign exchange regulator might be seeking out higher-yielding but riskier investments in order to diversify the nation's massive foreign reserves, analysts said on Monday.

The State Administration of Foreign Exchange (SAFE), which manages China's $3.2 trillion in foreign reserves, has acquired a 3.04 percent stake in Munich Re, the world's largest reinsurer by the volume of premiums charged annually, according to the German group.

Analysts said that China might start to accelerate the diversification of its foreign reserves by shifting toward higher-yielding but riskier equity investments and away from traditional fixed-income products.

Munich Re stake signals 'strategic shift' on reserves

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