Deep Thoughts by Lou Jiwei

 Ashby Monk

Today’s China Daily has an op-ed written by CIC  Chairman Lou Jiwei, which touches on the financial crisis, the CIC’s ongoing development as an institutional investor and various other deep thoughts. Of particular interest was his interpretation of the CIC’s response to the global economic turmoil: 

“While allocating long-term strategic assets properly, we have adjusted the annual asset allocation strategy in a timely manner by voluntarily slowing down the pace of investment in stocks and setting a cash-based prudential investment strategy. As a result, we kept a relatively high cash-asset ratio and avoided significant risk and losses. On the whole, CIC had a small book loss on its foreign investments in 2008.”

Another  (albeit more cyinical) interpretation would be that the CIC got burned on its first two major overseas investments and was forced to take a time-out before making any more investments. It was during this time-out that global financial markets collapsed. Indeed, even if the Blackstone and Morgan Stanley deals never make money, they may still be viewed as home runs for the simple reason that they likely prevented the CIC from losing much, much more money in a disastrous market.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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