Posted by: Frederik Balfour on April 3, 2008
Jesse Wang, vice president and chief risk officer of China’s $200 billion sovereign fund, the China Investment Corporation or CIC, launched a major PR effort yesterday at Hong Kong ballroom full of investors sponsored by Credit Suisse. “We have no secret strategic mission at all,” he said, emphasizing that the fund’s sole mandate is to gain a higher return on a risk adjusted basis to help offset foreign exchange losses caused by the plunging dollar.
What kind of a return is he looking for? “Middle single digits or slightly higher than middle single digits,” he explained in response to a question from the audience. I take that to mean slightly above 5%, which is something more than what US treasuries are paying, especially when you take account of RMB appreciation, which is running at about 10% annualized rates at the moment.
But by Wang’s own admission, the fund has gotten off to a rocky start. It’s $3 billion dollar investment in Blackstone last fall has nearly halved in value. “The Chinese public is more eager to count our losses every day,” he said, causing the room to erupt into laughter. The fund has also invested about $5 billion to bail out Morgan Stanley. In response to a question about his biggest challenge, he said lack of experience and too much money is a problem. Personally, I’d rather been in his shoes than those of most Wall Street banks, who have plenty of experience, but too little money.