China Investment Co Launches
Because of the huge size of the reserve, any investment decision on the assets can have a major difference in global financial markets and the Chinese economy, which is currently about twice the size of the forex reserves. Currently, information about the reserve's investment portfolio is not available to the public, but speculation from analyst community has suggested the reserves are primarily placed in global bond markets, especially in US bonds. Same analyst research has suggested that the new company may shift assets away from bond markets and balance more of the reserves to other financial asset classes, most notably stocks. If China decides to move more of the assets from bonds to stock markets, there are plenty of successful other state-run funds around the world, which may give guidance as to what route to take. One example closeby is Temasek Holdings in Singapore. Set up in 1974, Temasek Holdings oversees the investments of the Singapore government. Its average annual rate of return in the last three decades has been 18 percent, much higher than the annual growth of the stock market. By the end of 2006, the company was managing $100 billion worth of assets, about 83 percent of Singapore's GDP for the year. Another good examples of successful asset management by state-run institutions include Qatar, which has the Qatar Investment Authority, and United Arab Emirates', which has several, including The Abu Dhabi Investment Authority. |