CIC Reloads

Ashby Monk

Jamil Anderlini of the FT reports that the CIC will receive an injection of up to $200 billion in the coming months. This is confirmation of a development initially reported here in early November. While it’s gratifying to be right, I don’t want to give the impression of being too prescient; I just have reliable sources.

In any case, the CIC is looking very strong at the moment. I’ve already talked about how the GFC has played into its favor, clearing away many of the fund’s initial problems. Even still, the CIC is about to become a half a trillion dollar investment fund. To put this in perspective, with this capital injection, the CIC will be around $50 billion larger than Norway’s GPF-G. The latter is the largest stock owner in Europe and owns about 1 percent of global equities. So, the CIC is on its way to being a very significant player in global financial markets.

With this in mind, the CIC leadership has worked hard to contain geopolitical concerns associated with the fund’s dramatic rise. For example, Gao Xiqing recently made a point of saying that the CIC was not a strategic investor (even though the fund has been raising eyebrows with its recent wave of resource and energy investments).

The question I have is whether a half a trillion dollar investment vehicle sponsored by a communist country with a mandate to invest in global private markets will reignite protectionist fears. I don’t know the answer to that. But I can see how the words of the late, great Christopher George Latore Wallace might apply here: “…the more money we come across. The more problems we see.”

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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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