CIC Stops Buying Europe Government Debt on Crisis Concern

By Andres R. Martinez

May 10 (Bloomberg) — Gao Xiqing, president of China Investment Corp., said the nation’s sovereign wealth fund has stopped buying European government debt on concerns about the region’s financial turmoil.

CIC will continue to look for new investments in Europe as part of its strategy to boost allocations to infrastructure, private-equity assets as well as emerging markets to help boost returns, Gao said. CIC, with an estimated $440 billion in assets, is the world’s fifth-largest country fund, according to Sovereign Wealth Fund Institute.

“What is happening in Europe right now is of course of concern,” Gao said in an interview in Addis Ababa, Ethiopia, during the World Economic Forum on Africa. “We still have our people looking at opportunities in Europe, even though we don’t want to buy any government bonds.”

Europe’s turmoil is reigniting on the second anniversary of policy makers’ first attempt to prevent Greece’s woes from spreading. That raises fresh doubt over the strategy just as Greece’s election spurs concern that the country may not meet the terms of its international rescues and will seek a solution outside the euro.

6 Responses

  1. As an aside, can someone explain to me – from an MMT perspective – what exactly a sovereign wealth fund is? Is it just a basket of deposits of foreign currency held at other central banks?
    thanks
    Jason

  2. We lent unsecured to the euro boyz to help save the system, can’t china step up to the plate and share some love too? How will the pass the john kerry “global test” with such selfishness? 😉

    1. @Save America, Warren, I just read this – the article talks about how the fed is basically unaccountable and interprets its own rules any way it sees fit and that those CIC boyz are buying US Banks:

      http://www.nakedcapitalism.com/2012/05/quelle-surprise-fed-defends-management-of-banks-performing-badly-against-activitsts.html

      Particularly galling given that the Fed has previously waived the Bank Holding Company Act for a Chinese government controlled bank to acquire a US bank despite having no authority whatsoever to do so.

      http://www.americanbanker.com/bankthink/china-investment-corporation-bank-holding-company-act-1039482-1.html

      Admittedly, applying the BHCA to the Chinese government would be a ridiculous concept, but it shows that the Fed applies the BHCA rules when it wants.

      You repeatedly say warren that the fed is controlled by congress, and not the other way around. Why would congress allow the CIC to take over our US banks?

      1. @WARREN MOSLER, Its like an onion, a riddle, within a mystery, within an enigma, just when I think I have things figured out, a whole new layer unravels 🙁 CIC buying control in US banks, presidential administrations getting large lobbying money from ultimately asian sources, chinese nationals working at treasury computers and coding fed software and marking up and down 1’s and 0’s in virtual spreadsheets. Cisco feigning surprise that chinese made computers and networking hardware have stealth silicon inside doing corporate espionage, US top secret military IT workers also feigning surprise, Lifes too short…. Think I am gonna go fishing for some tarpon…

Leave a Reply to WARREN MOSLER Cancel reply