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UK companies help China’s sovereign wealth fund invest abroad

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UK asset managers are obtaining mandates from China Investment Corp, the nations USD200bn sovereign wealth fund, according to Carl Hinze, associate in law firm Eversheds’ Shanghai offic

UK asset managers are obtaining mandates from China Investment Corp, the nations USD200bn sovereign wealth fund, according to Carl Hinze, associate in law firm Eversheds’ Shanghai office.

Many people believe China will lead the world out of the current global economic downturn, and CIC is set to play a key role in this mission, according to Hinze.

CIC’s vice-general manager Wang Jianxi said recently that its investments will include equity, fixed-income products and alternative investments. Ninety per cent of CIC’s current investment portfolio consists of assets with high liquidity, including cash and cash equivalents such as treasury bonds and bank notes.

Hinze says CIC made an annual return of five per cent in 2008, whereas a number of sovereign funds have seen their asset holdings shrink from the financial crisis. However, CIC has suffered big losses from its two major investments in the US private equity firm Blackstone and the investment bank Morgan Stanley.   

‘The CIC was set up in September 2007, with its initial capital coming from the country’s massive foreign exchange reserves, which stood at USD1.95trn by the end of 2008. There is little doubt that CIC is cashed up and looking for bargains. CIC hopes that the foreign mandates will help them to know when and how they can find such deals. Like most sovereign wealth funds, CIC is restricted by many factors and cannot invest wherever there’s a market opportunity, but there is little doubt that CIC will be in the headlines of the financial pages for some time to come," Hinze adds.

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