A sign hangs at Morgan Stanley Inc.
headquarters in New York
City. (Xinhua/AFP File Photo)
BEIJING, Dec. 19 (Xinhua) -- China Investment Corp.
(CIC), the nation's state-owned forex investment firm, said late Wednesday that
it has agreed to invest 5 billion U.S. dollars in the No. 2 U.S. investment bank
The Chinese firm, which invested 3 billion U.S.
dollars earlier this year in the U.S. private equity firm Blackstone Group, will
purchase equity units that are mandatorily convertible into 9.9 percent of
Morgan Stanley common shares.
The equity units carry a fixed annual interest rate
of nine percent before conversion on Aug. 17, 2010.
The purchase is "a long term, passive financial
investment" and does not lead to a role in management of Morgan Stanley, said a
statement from CIC.
"It is a good opportunity to invest in U.S.-based
financial institutions, many of which are being undervalued when the subprime
mortgage crisis has had an impact on them," Li Yang, director of the Institute
of Finance and Banking under the Chinese Academy of Social Sciences, told
Also on Wednesday, Morgan Stanley reported a
larger-than-expected loss in the fourth fiscal quarter due to a 9.4-billion-U.S.
dollar write down from its exposure to subprime and other mortgage-related
It lost 3.61 billion U.S. dollars in the fourth
quarter, compared to a profit of 2.27 billion U.S. dollars in the same period a
"CIC believes that Morgan Stanley has potential for
long-term growth, particularly in its investment banking, asset management and
wealth management businesses, as well as new business development opportunities
in emerging markets," said the statement.
The purchase is made in accordance with CIC's global
investment strategy, which is to seek attractive long-term returns with
acceptable risks, it said.
CIC will maintain a cautious investment strategy,
Finance Minister Xie Xuren said last week at the China-U.S. high-level economic
talks. "It will pursue long-term investment instead of short-term speculation,
and will achieve a balance between security and profitability."
China Investment Corp. was set up in September this
year, with an initial capital of 200 billion U.S. dollars from the country's
massive foreign exchange reserves.
One-third of the capital would be used to purchase
Huijin Investment Co. an investment arm of the Chinese government, and another
third would be injected into state-owned banks for shareholding reforms, CIC
chairman Lou Jiwei said.
The remaining 70 billion U.S. dollars was earmarked
for overseas investment in a wide range of portfolios but would not seek
control, he said.
Earlier this month, CIC made its second investment
this year of about 100 million U.S. dollars in the initial public offering of
the China Railway Group in Hong Kong.
China's state forex investment company
BEIJING, Sept. 29 (Xinhua) -- China Investment Corporate
Ltd. (CIC), the country's long-awaited state forex investment company set up to
make better use of its huge foreign exchange reserve, was inaugurated on
"We will maintain transparency of company operations on
the premise of safeguarding our commercial interests," said Lou Jiwei, the
company's newly-appointed board chairman, who is also deputy secretary-general
of the State Council, or the cabinet.
Analysts said CIC's debut was a major move China had made
to increase the value of its 1.4-trillion-dollar forex reserve, the world's
largest. Full story
China to issue 200 bln yuan special T
bonds to finance forex exchange firm
BEIJING, Sept. 10 (Xinhua) -- China is to issue 200
billion yuan (26.7 billion U.S. dollars) of special treasury bonds as the second
tranche of a planned 1.55 trillion yuan basket to finance the country's new
foreign exchange investment firm.
The bonds would be sold to the public, with outstanding
terms of more than 10 years, the Ministry of Finance announced on Monday. Full story