CIC'S Foreign Exchange Trader'S Difficulties

< p > < strong > poor performance < /strong > < /p >

< p > the above news is not the first time that CIC has met with rumors that it is going to be pformed.

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In 2011 P, a senior think-tank proposed to set up more than 3 institutions like CIC, directly controlled by the State Council, to manage China's growing foreign exchange reserves.

At that time, when the global financial crisis broke out and deepened continuously, as the largest dollar reserve country in the world, it was not appropriate to do too much action. CIC's uniqueness was preserved.

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< p > at present, the a href= "http://www.91se91.com/", which is responsible for most of China's external investment, belongs to the central bank, while the CIC, which is responsible for a small part of its external investment, is subordinate to the State Council.

The central bank has revealed to the Great Britain finance that the central bank actually wants to manage the foreign reserves itself. In the future, the main functions of the safe will be similar to that of the CBRC, which focuses on the regulatory duties rather than the asset management functions.

Therefore, how to find hundreds of billions of dollars to repay a slightly higher and more stable investment way to achieve the value of 3 trillion and 400 billion dollars has always been the core of the test.

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< p > however, since the establishment of CIC, some senior officials and experts have been constantly dissatisfied with their performance.

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< p > July 26th, CIC's 2012 annual report was officially released.

By the end of 2012, the CIC's overseas investment portfolio was 10.6% in 2012, and the cumulative annualized interest rate was 5.02%. At present, the central bank's 5 year time deposit benchmark interest rate is 4.75% (up to 10% to 5.23%), of which the performance in 2008 and 2011 two showed negative growth.

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< p > in fact, since the founding of CIC, the most criticized is that the earliest two investments -- Morgan Stanley and the famous private equity fund Black Rock Inc -- are catching up with the outbreak of the financial crisis in 2008, resulting in large book losses.

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< p > < strong > decision making error < /strong > < /p >.

< p > > a href= "http://www.91se91.com/" > CIC < /a > the pressure of the company comes from its special genes.

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< p > September 2007, CIC was established by the State Council, mainly engaged in foreign exchange fund investment management business.

The registered capital of US $200 billion comes from the Treasury raising through special treasury bonds.

At the beginning of its establishment, CIC would have to pay 5% interest annually for the registered capital. No wonder its predecessor helm and the current Minister of finance Lou Jiwei publicly stated that he would earn 300 million yuan per day when he opened his eyes.

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< p > in fact, coupled with the rapid appreciation of the RMB against the US dollar in the past few years, its interest rate has increased by nearly 5% annually.

By this calculation, if the annual yield of CIC is below 10%, it may fall into a deficit.

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< p > the establishment of CIC is still a special task. In addition to the economic downturn period in the last two years, it has revitalize the central finance by invigorated the $3 trillion and 500 billion reserve, and its effectiveness in hedging liquidity has been remarkable after its establishment.

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< p > after the establishment of the China Investment Corporation, the foreign exchange purchased by the Ministry of finance is no longer included in the international reserve standards according to the relevant international standards, which greatly relieves the pressure of RMB appreciation and the issuance of the basic currency of the central bank. The 10~15 year special treasury bonds used to purchase foreign exchange reserves provide an important long term liquidity control tool for the central bank besides the short-term bills. This means that the central bank can put the long-term treasury bonds held in the market at any time, and no longer need to issue new bills frequently to hedge excess liquidity, so that the central bank can get rid of the dramatic appellation of "central bills company".

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< p > however, as a foreign exchange investment trader, CIC has not synchronized with the growth of foreign exchange reserves on the scale of trading.

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When p was established in 2007, CIC spent almost about 100000000000 of its foreign exchange on foreign investment, accounting for almost 1/10 of China's foreign exchange reserves at the time. By the end of 2012, the $200 billion overseas investment fund managed by CIC accounted for only 6% of the foreign exchange reserves of 3 trillion and 400 billion US dollars.

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In the face of the widening gap, CIC's uniqueness will become increasingly difficult to retain. Because China's huge foreign exchange reserve is bound to not replicate the "Singapore model", relying on a sovereign wealth fund can solve the important task of foreign investment and capital investment. P

According to sources close to CIC, the amount of overseas investment held by CIC was not fundamentally changed, mainly because of incorrect investment decisions at the beginning of its establishment.

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At the beginning of P, CIC was the first sovereign wealth fund to be established in China. However, because of the background of the financial management department and the central bank and the safe, most of the company's top managers and managers were simply positioning the company as a huge financial company rather than a strict investment company.

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At that time, there was no fundamental change in the concept of overseas investment, and the return on investment was still regarded as the main means of assessment for P.

Facts have shown that CIC's investment in energy projects is better than that of financial investment during the financial crisis, that is, CIC, which once wanted to make waves in the global financial sector, initially ended up losing the "Mai Cheng".

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After P's failure in financial investment, CIC began to try to invest in a larger scope and diversify its investment risk, but the main investment area is still the Chinese government's preferred financial and energy sector.

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Lou Jiwei P once said at the 2013 Asian financial forum that CIC, as a long-term financial investor, pursued returns after risk compensation. One way to diversify risks is to ignore any industry and diversify investment in various industries.

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< p > according to the 5 annual reports disclosed by CIC, its overseas investment business involves two categories of financial product portfolio investment and direct investment, and seeks to balance investment between traditional financial assets such as stocks and bonds and non-traditional financial assets such as hedge funds, commodities, private equity funds, and real estate and infrastructure.

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Gao Xiqing, general manager of CIC, has said that in addition to the tobacco industry, gambling industry and enterprises producing weapons of mass destruction, any industry of CIC can vote. Of course, the ultimate goal is to make money back. P

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< p > < strong > create investment < /strong > /p >

< p > to see "a href=" http://www.91se91.com/ "investment > /a" as soon as possible, since 2009, CIC has invested in electricity, energy, infrastructure and mobile communications projects in the United States, Britain, Russia, Canada and Kazakhstan.

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< p > although the investment has covered the whole world, the scope has also developed from the initial investment in the financial industry to many fields. However, insiders pointed out that most of the projects are the seeds scattered hastily, and how many will grow into big trees in the future. It is hard to say.

The reason is that the characteristics of CIC's special sovereign fund have not changed fundamentally.

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There are several categories of sovereign wealth funds in the world from P sources.

For example, the surplus of foreign exchange reserves is mainly represented by the Asian countries such as Singapore (Temasek), Malaysia, Korea and other countries and regions, as well as the foreign exchange surplus of natural resources exports, including the foreign trade surplus of natural resources such as oil, natural gas, copper and diamonds, such as sovereign funds in some countries in the Middle East.

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< p > sovereign wealth funds are developing countries that do not have monetary dominance. These countries do not have global liquidity and have to accumulate international reserve currencies such as the US dollar and the euro in various ways, thus forming a foreign exchange surplus.

In order to maintain and increase these surpluses, it is necessary to invest and asset allocation globally.

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< p > but the background of global financial market has changed.

Shanghai Jiao Tong University researcher Gao Liankui believes that in the past 5 years, financial markets in developed countries have become saturated, and under the condition of asymmetric information, it is difficult to grasp good investment opportunities. CIC's better investment target should be a developing country with high speed and relatively stable political environment.

At the same time, CIC should shift from its past financial investment to strategic investment, that is to say, we should try to find investment opportunities blindly, and turn into the initiative to create investment opportunities.

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< p > for the future, economist Li Caiyuan (blog, micro-blog) said that the sovereign wealth fund of the state can not act according to the private investment fund's thinking, and can not only draw money from investors like the retail investors, but also look at the long-term benefits.

He believes that the new CIC company "steering the helm" should change the original thinking of revenue only, which is only a means.

In essence, CIC needs to combine the strategy of pformation of China's economy and the internationalization of RMB, and eventually pform the long accumulated wealth abroad into "real gold and silver" and take it back to China.

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Less than P, the most important thing that CIC needs to do is to look to emerging economies like other sovereign wealth funds.

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