Chairman Lou Jiwei Offers Glimpse Into China’s Sovereign Wealth Fund; Singapore’s Temasek to Create $4 Billion Investment Unit

CIC's Jiwei, a computer scientist-turned-economist, says the SWF will let its own in-house portfolio managers lead investments in developed markets. SWF Temasek will launch a new wholly owned subsidiary.

(February 11, 2010) – This year, China Investment Corp (CIC), the country’s $300 billion sovereign wealth fund, will manage more of its investments in developed markets in-house.


The announcement comes months after the fund announced a plan to invest billions in hedge funds.


“As of now, most of CIC’s overseas funds are managed by outside portfolio managers, but we will gradually increase in-house investment in more efficient developed markets in the future,” the China Securities Journal paraphrased the fund’s chairman Lou Jiwei as saying. Nevertheless, Jiwei said he still wants to rely more on external managers for deals in emerging markets.


The SWF recently listed some of its investments in the U.S. in a regulatory filing with the U.S. Securities and Exchange Commission. At the end of last year, according to CIC’s Form 13F filing, the fund had some $9.63 billion invested in the stocks of 60 U.S. companies, including Apple, Citigroup, Coca Cola, Morgan Stanley and News Corp. The SEC filing excluded mention of CIC’s hedge fund investment and its stake in private equity house The Blackstone Group, FINalternatives reported.


CIC, created in 2007, is the world’s fifth-largest sovereign wealth fund.


In other SWF-related news, the Temasek, one of Singapore’s two SWFs, is scheduled to establish a wholly owned subsidiary, named Seatown, with a $3 billion to $4 billion available to invest when fully established, the Financial Times reported. The unit’s investments are expected to include stocks and bonds, with potential large stakes in foreign companies. The fund will focus on emerging markets with a concentration on investments within Asia.


Charles Ong, Temasek’s senior managing director and chief strategist, will head the unit, along with Nasser Ahmad, co-founder of a hedge fund based in New York, according to a Reuters report.


The fund suffered steep losses on UK and US investments during the global financial meltdown, yet its portfolio has recovered significantly in the past year. As of July 2009, Temasek has about $122 billion in assets under management.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href=''></a>; 646-308-2742