China’s sovereign wealth fund, which last year poured US$5 billion into Morgan Stanley, is reluctant to plow more money into foreign banks until governments hash out coherent policies to cope with the global economic and financial turmoil, the fund’s head said yesterday.
The remarks by Lou Jiwei (樓繼偉), chairman of the US$200 billion China Investment Corp (CIC, 中國投資公司), represent a new blow for ailing banks that were hoping the Chinese government investment fund would use its deep pool of cash to bail them out.
Lou said that he was unwilling to invest in foreign banks amid so much turbulence and uncertainty. Confidence in financial institutions is lacking because foreign governments seem to be changing their policies every week, he said.
“Right now, we do not have the courage to invest in financial institutions,” said Lou, speaking on a panel discussion in Hong Kong at a conference organized by former US president Bill Clinton.
“We have to wait for the time when there won’t be massive collapses of financial institutions,” he said.
The Chinese government investment arm was set up to make profitable use of Beijing’s foreign reserves, which totaled US$1.9 trillion by the end of September.
Most of those funds are kept in US Treasuries and other safe but low-yielding securities. But there have been complaints about the performance of some of the fund’s higher profile investments amid the recent market turmoil.
CIC’s biggest investment to date was a US$5 billion investment in Morgan Stanley in last December — one of nine major banks that subsequently sought relief from the deepening credit crisis through the US government’s US$700 billion banking bailout. That investment gave CIC a 9.9 percent stake in the investment bank.
The Chinese sovereign wealth fund was also said by Chinese media to have invested more than US$100 million in Visa Inc’s US$19.1 billion initial public offering in March and has invested in a fund managed by JC Flowers, a US private equity firm.
Last month, the private equity firm Blackstone Group said in a regulatory filing that it has agreed to raise CIC’s ownership limit from 9.9 percent to 12.5 percent. CIC paid US$3 billion for a stake in Blackstone’s June initial public offering, but it has seen the value of that investment plunge — a major sore point for many Chinese officials and citizens.
Lou said China’s fund would help soften the bite of the ongoing global crisis by continuing to invest in wealthy countries as well as in developing nations. But he said people should not count on China to pull the world out of the economic crisis.
“China can’t save the world. It can only save itself,” he said.
Lou said China’s economy, the world’s fourth largest, is in relatively good shape, but is facing several major challenges, such as boosting domestic consumption and becoming less dependent on exports.
“This will be very difficult and requires a lot of reforms,” he said. “It might take one to two years.”
Japanese Prime Minister Sanae Takaichi yesterday lavished US President Donald Trump with praise and vows of a “golden age” of ties on his visit to Tokyo, before inking a deal with Washington aimed at securing critical minerals. Takaichi — Japan’s first female prime minister — pulled out all the stops for Trump in her opening test on the international stage and even announced that she would nominate him for a Nobel Peace Prize, the White House said. Trump has become increasingly focused on the Nobel since his return to power in January and claims to have ended several conflicts around the world,
UKRAINE, NVIDIA: The US leader said the subject of Russia’s war had come up ‘very strongly,’ while Jenson Huang was hoping that the conversation was good Chinese President Xi Jinping (習近平) and US President Donald Trump had differing takes following their meeting in Busan, South Korea, yesterday. Xi said that the two sides should complete follow-up work as soon as possible to deliver tangible results that would provide “peace of mind” to China, the US and the rest of the world, while Trump hailed the “great success” of the talks. The two discussed trade, including a deal to reduce tariffs slapped on China for its role in the fentanyl trade, as well as cooperation in ending the war in Ukraine, among other issues, but they did not mention
REASSURANCE: The US said Taiwan’s interests would not be harmed during the talk and that it remains steadfast in its support for the nation, the foreign minister said US President Donald Trump on Friday said he would bring up Taiwan with Chinese President Xi Jinping (習近平) during a meeting on the sidelines of the APEC Summit in South Korea this week. “I will be talking about Taiwan [with Xi],” Trump told reporters before he departed for his trip to Asia, adding that he had “a lot of respect for Taiwan.” “We have a lot to talk about with President Xi, and he has a lot to talk about with us. I think we’ll have a good meeting,” Trump said. Taiwan has long been a contentious issue between the US and China.
GLOBAL PROJECT: Underseas cables ‘are the nervous system of democratic connectivity,’ which is under stress, Member of the European Parliament Rihards Kols said The government yesterday launched an initiative to promote global cooperation on improved security of undersea cables, following reported disruptions of such cables near Taiwan and around the world. The Management Initiative on International Undersea Cables aims to “bring together stakeholders, align standards, promote best practices and turn shared concerns into beneficial cooperation,” Minister of Foreign Affairs Lin Chia-lung (林佳龍) said at a seminar in Taipei. The project would be known as “RISK,” an acronym for risk mitigation, information sharing, systemic reform and knowledge building, he said at the seminar, titled “Taiwan-Europe Subsea Cable Security Cooperation Forum.” Taiwan sits at a vital junction on
RSS