Over the weekend: China launched its $200 billion state-run investment fund, China Investment Corp. (CIC), to be managed by Gao Xiqing, a U.S.-trained lawyer. 
Around $67 billion will be used to acquire the assets of Central Huijin Investment, a holding company run by People's Bank of China (pictured), which owns substantial stakes in Industrial & Commercial Bank of China (HKG:0349), Bank of China Co. Ltd (HKG:3988) and China Construction Bank Corp. (HKG:0939).
At $1410 billion on August 31st, China's Forex reserve is the largest in the world, surpassing Japan's $878 billion a few years ago.
This means that the bulk of China's forex reserves remain under central bank control. This is definitely a risk-adverse move by the state -- after all, Gao was responsible for the National Social Security Fund when it invested in The Blackstone Group LP (NYSE:BX) and BG Group plc (LON:BG).
FYI: shares of Blackstone closed at $25.08 on Friday, down from the 4.5% discount IPO price (around $29) that the Fund had purchased it for. The Fund has a $3 billion, or 10%, stake in Blackstone.
Investigating what CIC is going to invest in is probably a good indicator of where the economy might be headed: it was reported that Hang Seng Index constituents were trading at 20 times earnings on average, the first time since early 2000. Interpret that however you may.
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Posted by: Investment Bank Search Engine | October 29, 2007 10:12 PM | Permalink to Comment