Sovereign fund to invest in global equity market

Sovereign fund to invest in global equity market

China Investment Corp (CIC), the country's $200 billion sovereign wealth fund, will soon start investing in global equity markets through its overseas asset managers, the China Securities Journal said on Wednesday. CIC will invest in equity asset classes such as global equity active, emerging market active and Asia ex-Japan equity active, the newspaper said, citing unnamed sources. A source said last month that CIC was in final talks to entrust each of eight overseas asset managers with $250 million to $600 million worth of fixed income funds focused on emerging markets. CIC expects to have $80-90 billion of its total assets of $200 billion available for overseas investment.

The People's Republic of China has US $1.7 trillion in currency reserves. The China Investment Corporation was established with the intent of utilizing these reserves for the benefit of the state, modeled according to Singapore's Temasek Holdings. The state-owned Central Huijin Investment Corporation was merged into the new company as a wholly-owned subsidiary company.[5]
The Corporation aims to invest in around fifty large-sized enterprises across the world. Special treasury bonds were issued to create the capital that the CIC needed. 1,550.35 billion yuan ($207.91 billion) was issued in this bond sale. The bond process was completed in December 2007.[7] According to Lou Jiwei, the CIC needs to make a profit of 300 million Yuan every day just to pay the interest on the bonds and operation costs. The CIC paid its first interest on the bonds in February 2008 where it paid 12.9 billion yuan