China Investment Corp. is looking for investment opportunities in Europe, though the head of China's $300 billion sovereign-wealth fund is cautious about the continent's economy.
Economic growth in European countries is slowing because of the euro-zone sovereign debt crisis, said CIC Chairman Lou Jiwei on Saturday, noting exports to emerging markets play a key role in driving Europe's economy.
If economic growth slows in emerging countries like China and the U.S. withdraws fiscal stimulus, then external factors boosting Europe will be reduced, he said.
Emerging counties, including China and India, are taking a series measures to grapple with inflation, which will likely lead to a slowdown in their growth. China, for example, is aiming for a growth of around 8% this year, below last year's 10.3% expansion.
"From the investment perspective, (we're) not very optimistic about Europe," Mr. Lou said at the Boao Forum for Asia, a meeting of regional business and political leaders in the southern Chinese province of Hainan.
"But it doesn't mean we wouldn't like to invest (in Europe)," he said, adding CIC has big exposure to Europe and its investment return from the continent is not bad.
"There are still opportunities in Europe, such as infrastructure sectors...we're looking for some investment opportunities there," said Mr. Lou.
Established in 2007, CIC has invested a chunk of China's enormous foreign-exchange reserves that the government handed it to try to achieve higher returns than the sovereign debt China had traditionally bought with its hard currency. According to the latest financial reports available, CIC had total assets of $332 billion at the end of 2009, and the European region accounted for 20.5% of CIC's diversified equity investments.
On Saturday, Mr. Lou also voiced a cautious note for the global economy. He said world economic growth is likely to slow in 2012, partly due to the still-fragile property market in the U.S.
Despite recent rosy data, the U.S. has yet to solve the problem in its real estate market, which hasn't yet bottomed out, said Lou.
But thanks to the strong recovery in emerging markets, he said the global economy will continue to be on the mend this year.
"We are optimistic about the near-term global economic situation, but over the long term we are a little pessimistic," he said.
Mr. Lou added it may be inevitable for developing nations to increase interest rates and make use of foreign-exchange ates to rein in inflation. "Given inflation is still on the rise, quantitative tightening measures may not be enough to control inflation," he said.
The U.S. Federal Reserve has pumped hundreds of billions of dollars into the economy hoping to stimulate growth, but much of the liquidity has spilled into foreign markets, as investors seek higher returns in faster-growing regions. The flood of money has also driven up prices of oil, copper, cotton soybean and other commodities, adding to inflationary pressures in China and other parts of Asia.
Authorities in emerging markets like China often prefer using quantitative tightening, such as banks' reserve ratio hikes, to orthodox tightening like interest rate increases when managing liquidity and battling inflation, partly because of concerns about massive speculative hot money inflows.
As part of its efforts to rein in fast price rises, the Chinese central bank has increased interest rates four times and raised the proportion of deposits banks must hold in reserve nine times since the start of last year.
China's statistics bureau said Friday the country's consumer price index rose 5.4% in March from a year earlier, accelerating from a 4.9% rise in February and well above the government target of 4% for 2011.
Source: http://online.wsj.com
Economic growth in European countries is slowing because of the euro-zone sovereign debt crisis, said CIC Chairman Lou Jiwei on Saturday, noting exports to emerging markets play a key role in driving Europe's economy.
If economic growth slows in emerging countries like China and the U.S. withdraws fiscal stimulus, then external factors boosting Europe will be reduced, he said.
Emerging counties, including China and India, are taking a series measures to grapple with inflation, which will likely lead to a slowdown in their growth. China, for example, is aiming for a growth of around 8% this year, below last year's 10.3% expansion.
"From the investment perspective, (we're) not very optimistic about Europe," Mr. Lou said at the Boao Forum for Asia, a meeting of regional business and political leaders in the southern Chinese province of Hainan.
"But it doesn't mean we wouldn't like to invest (in Europe)," he said, adding CIC has big exposure to Europe and its investment return from the continent is not bad.
"There are still opportunities in Europe, such as infrastructure sectors...we're looking for some investment opportunities there," said Mr. Lou.
Established in 2007, CIC has invested a chunk of China's enormous foreign-exchange reserves that the government handed it to try to achieve higher returns than the sovereign debt China had traditionally bought with its hard currency. According to the latest financial reports available, CIC had total assets of $332 billion at the end of 2009, and the European region accounted for 20.5% of CIC's diversified equity investments.
On Saturday, Mr. Lou also voiced a cautious note for the global economy. He said world economic growth is likely to slow in 2012, partly due to the still-fragile property market in the U.S.
Despite recent rosy data, the U.S. has yet to solve the problem in its real estate market, which hasn't yet bottomed out, said Lou.
But thanks to the strong recovery in emerging markets, he said the global economy will continue to be on the mend this year.
"We are optimistic about the near-term global economic situation, but over the long term we are a little pessimistic," he said.
Mr. Lou added it may be inevitable for developing nations to increase interest rates and make use of foreign-exchange ates to rein in inflation. "Given inflation is still on the rise, quantitative tightening measures may not be enough to control inflation," he said.
The U.S. Federal Reserve has pumped hundreds of billions of dollars into the economy hoping to stimulate growth, but much of the liquidity has spilled into foreign markets, as investors seek higher returns in faster-growing regions. The flood of money has also driven up prices of oil, copper, cotton soybean and other commodities, adding to inflationary pressures in China and other parts of Asia.
Authorities in emerging markets like China often prefer using quantitative tightening, such as banks' reserve ratio hikes, to orthodox tightening like interest rate increases when managing liquidity and battling inflation, partly because of concerns about massive speculative hot money inflows.
As part of its efforts to rein in fast price rises, the Chinese central bank has increased interest rates four times and raised the proportion of deposits banks must hold in reserve nine times since the start of last year.
China's statistics bureau said Friday the country's consumer price index rose 5.4% in March from a year earlier, accelerating from a 4.9% rise in February and well above the government target of 4% for 2011.
Source: http://online.wsj.com
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