As China's sovereign assets fund, China Investment Corporation
(CIC) will serve as a stabilizing factor in the global financial
market with its long-term investment strategy, Lou Jiwei, visiting
Chairman of CIC said in London on Monday.
On his first trip abroad as chairman of the Chinese sovereign
fund, Lou, who is controlling a $200-billion investment fund, said,
"We will adopt a long-term and prudent investment principle and a
safe, professional portfolio strategy that adapts to market
changes, which will put emphasis on a rational match of returns and
risks."
"Judging from our investment strategy and scale, we are unlikely
to present a major impact on the international market," Lou
said.
One-third of CIC's $200 billion was used to purchase Central
Huijin Investment Company Limited, while another third is being put
aside to be invested in state-owned banks that are to be
restructured into joint-stock companies. The remainder of the
capital, some $70 billion, is available for overseas investing, Lou
told the City's financial leaders at a banquet given in his
honor.
"Even the $70 billion must be invested by batches, in a wide
range of portfolios, over which we do not seek control," Lou
said.
With regard to transparency in sovereign wealth funds, CIC is
more than happy to learn the managerial expertise and best
practices of financial institutions, including those in the City of
London, particularly the proven experiences concerning sovereign
wealth funds, Lou said.
Nevertheless, there should be a limit to transparency, Lou said,
adding that asset management companies deal in a variety of
financial assets, which are more or less the same in nature and
liable to the so-called sheep-flock effect. Therefore disclosure of
information by asset management companies should be done very
carefully.
Over-disclosure may, in increasingly integrated financial
markets, affect the stability of the international financial
market, he said.
Transparency requirements must be based on the principle of
fairness which demands that the entire ownership and business
freedom of a company be respected, the CIC boss said.
While an asset management company is required to increase
transparency, the market entry thresholds and criteria of an
investment destination must be open and easily understood too, he
said, adding that discrimination should be avoided to reduce
uncertainty related to investment activities.
Protection of national security should not be a pretext for
neo-protectionism, Lou said.
Since the beginning of this year, some countries have been
preaching how sovereign wealth funds might menace national
security.
"As a manager of sovereign wealth funds, I do not expect the
over-use of national security as a pretext for investment
protectionism and financial protectionism to damage the stability
of international economy and finance," Lou said.
Lou is leading a six-member delegation on his three-country
tour. After his three-day Britain visit, he will go to France and
Singapore.
(Xinhua News Agency December 12, 2007)
