From Staff Reports
More than 100 money managers around the world have applied for the opportunity to invest part of China's $200 billion sovereign wealth fund, the China Investment Corp. (CIC), a source close to the selection process told Bloomberg.
In December, firms were invited to apply for the chance to manage CIC assets via stocks on the MSCI All Country Index, MSCI EAFE Index, MSCI Emerging Markets Index and in non-Japanese Asian stocks. In a statement, CIC said investment advisors must have $5 billion in assets under management to be eligible for consideration. Applications will be taken until Jan. 15.
"The potential for global fund managers is huge since CIC has a lot of appetite for foreign expertise," Anny Wong, a BOCI-Prudential Asset Management official, told Bloomberg. Wong's firm currently has approximately $5 billion in assets under management, just meeting CIC's minimum, and has submitted an application to manage assets for CIC. "We're looking for CIC to be one of our most important clients."
Indeed, due to the size of the four-month old fund and its potential for future growth, CIC is destined to be an important client for any of the money managers that are eventually selected.
In seeking outside fund managers, China is following the lead of its Pacific Rim neighbor, Singapore. The current-account reserves of that city-state nation are managed by The Government of Singapore Investment Corp., which hires outside firms to manage some of its assets, and Temasek Holdings Pte, which oversees an additional $112 billion in assets.
Due to favorable currency exchange rates and an escalating trade surplus, China's foreign exchange reserves have reached a record high of $1.46 trillion, Bloomberg reports. Inflation is also at a record high, which has led Chinese Premier Wen Jiabao to loosen the global-investing restrictions on domestic firms, a move intended to encourage capital outflows.
But despite the size of CIC's coffers - and the fact that a sizeable portion of the assets are earmarked for domestic policy and infrastructure projects - money managers will need to be cautious in choosing investment options.
"CIC will likely focus on index funds and investments with quantitative strategies," Howard Wang, who oversees $14 billion at JF Asset Management Ltd. in Hong Kong, and who refused to reveal if his firm has applied to CIC, told Bloomberg. "It'll take a conservative approach to save powder for other government goals, such as injecting money into Chinese banks."
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