China’s $200 billion sovereign wealth fund, China Investment Corporation (CIC) has begun investing outside its borders like never before.
While in 2008, the fund invested just $4.8 billion abroad, this year it’s investing that much internationally each month.
After losing just 2.1% in 2008 due to a defensive posture, the fund is now officially on the attack.
China Daily: The pullback in asset, stock and commodity prices caused by the global financial crisis created long-term investment value, and the fund took advantage of stabilizing markets this year to make some investments in a broad range of sectors, the paper reported.
Proactive Investors: In the last few weeks alone CIC has been reported as taking major stakes in Russian and Kazakh oil companies, getting involved in a rare earths development in Inner Mongolia in China and taking a major stake in Hong Kong commodities company Noble Metals, which itself holds important stakes in some Australian and East European mining companies. Mining and oil, it would appear, are still a major focus for the Fund.
The purchasing power of CIC is huge. At the end of 2008 some 87.4% of its overseas investments were held in cash and cash equivalents. There have also been indications that the Chinese government is prepared to pump more funding into CIC should it be needed.
Note that the fund is said to be investigating massive investments in U.S. real estate as well.
WSJ, 9 Sep: In recent weeks, officials from China Investment Corp. have held talks with U.S. private-equity fund managers, including BlackRock Inc., Invesco Ltd. and Lone Star Funds, about potential investments in beaten-down property assets, namely mortgage securities backed by office buildings, hotels, strip malls and other commercial property. CIC also is considering buying ownership interests in buildings, according to the people with knowledge of the matter.