(May 10, 2012) — The roughly $440 billion China Investment Corporation has stopped its purchase of government debt in Europe as concerns over continued crisis in the region persist.
As part of the sovereign wealth fund’s strategy to increase allocations to infrastructure, private equity, and emerging markets, the CIC will continue looking for new investments in Europe, Gao Xiqing, president of China Investment Corp., told Bloomberg.
Additionally, according to Gao, the CIC is eager to increase its investment in Africa. Currently, however, most projects there aren’t large enough to fit the sovereign wealth fund’s investment criteria, the news agency reported Gao as saying.
Gao’s comments follow similar comments made by Lou Jiwei, Chairman of the CIC, earlier this year, who noted that the fund was not looking to allocate in the troubled Eurozone region’s debt. “For instance, the European bonds, like the government bonds of Italy and Spain, only central banks with certain responsibilities can invest, you know, for commercial investments, it’s very difficult to make such investments for long-term investors like us,” Lou said.
“Investment chances may lie in areas like infrastructure and industrial projects, and these projects can help economic recovery,” he added.
While default in the Eurozone is threatening institutional investors and asset managers, Jiwei has continued to expres his cautious position on continued investment in the European region, which accounted for 20.5% of the fund’s diversified equity investments at the end of 2009, according to its latest financial reports.
The statements by the two CIC heads come several months after Eurozone leaders travelled to China to ask about potential investment in the Eurozone region either by direct investment or boosting the European Financial Stability Facility (EFSF) – the fund initially meant to help bail out struggling Eurozone nations.