China-linked fund pulls disappearing act in Japan◎Nikkei Asian Review（2013.11.20）

China-linked fund pulls disappearing act in Japan◎Nikkei Asian Review（2013.11.20）http://asia.nikkei.com/Markets/Equities/China-linked-fund-pulls-disappearing-act-in-Japan

TOKYO -- OD05 Omnibus, an investment fund with probable Chinese government affiliations and significant holdings in the Japanese stock market, is dropping off of top-shareholder listings at many Japanese companies.

The move comes as a surprise to many market players because the fund had been expanding its investment in a wide range of listed Japanese companies in recent years, taking stakes of up to 5% each in automakers, consumer electronics companies, financial firms, materials makers and other firms.

As of the end of March, OD05 was listed as a major shareholder on the registers of 167 publicly traded Japanese companies, with the market value of its shareholdings totaling 4.2 trillion yen ($41.6 billion at the current exchange rate).  It was the third-biggest single holder of Japanese stocks after Nippon Life Insurance and NTT.

But according to data compiled by Nikkei on the top 10 shareholders in listed firms as of the end of September, the fund has vanished from the top 10 lists of at least 127 companies, including Toyota and Panasonic.

In many cases, reductions in its shareholdings likely brought it to No. 11 or lower, at which point disclosure is not required.  But even if the fund dropped just below the top 10, it is likely that it slashed by at least half its 2.8 trillion yen in stockholdings in the 127 firms as of March.

It still remains a major shareholder on the registers of 32 companies, including SoftBank and Takeda Pharmaceutical, but it dumped close to half its shares in many of them.  It has emerged as a new major shareholder at several other companies, including Japan Petroleum Exploration and Tokyo Derica.

Name change?

Since OD05 is a nominal trust fund, it remains a mystery as to who actually makes investments.  Many market players suspect that Chinese sovereign wealth funds, such as China Investment Corp (CIC), are doing the actual investment.

For about 80 companies where OD05 pulled its disappearing act, a trust called "Bank of New York" has appeared in its place.  The fund held 80.36 million shares in NEC at the end of March, but left the register in September, just as Bank of New York surfaced with 80.67 million shares instead.

Many companies have said they never met officials from either fund, and both shareholders are silent about the purpose and status of their investments.  And given that no trillion-yen transactions have been observed in the Japanese stock market involving single overseas investors since April, some strongly suspect a name change.