China Investment Corp. (CIC), the nation’s sovereignty wealth fund, is looking to be a stabilizing force in the international equity markets, according to its chairman, Lou Jiwei.

CIC, which manages 200 billion U.S. dollars of China’s massive foreign exchange reserves, seeks to stabilize global equity markets through investment. It would boost corporate transparency when it does not affect company interests, Lou told a forum here Thursday.

The majority of its investments would be in publicly-traded securities with a smaller part for alternative investments. The company would also seek direct investments.

Lou noted CIC would not make large scale investments before it finishes the building of its investment platform.

The company is currently recruiting international investment expertise and establishing committees for investment decision-making and risk management.

Lou said the management was under huge pressure as the fund’s capital was raised by the Ministry of Finance through the issuance of a special treasury bond. CIC has to bear the five percent cost of the capital.

This means the fund has to make a profit of 300 million yuan per day to make its ends meet, he said.

He added it would not invest in infrastructure.

CIC mainly entrusts its investments to fund managers at other companies, but it would also gradually make investments on its own and set up branches at international financial centers.

Li Yong, Vice Minister of Finance, said on Nov. 7 that one-third of CIC’s capital would be invested in global financial markets.

Another third would be used to purchase Central Huijin that now controls China’s major state-owned commercial banks. The remainder would replenish the capital of the Agricultural Bank of China and China Development Bank, said Li, also a CIC non-executive director.

Source:Xinhua

Copyright Fund China 2008.

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