New Energy Power Becomes the Focus of China's Foreign Storage Investment

Recently, CIC invested 1.8 billion U.S. dollars to participate in the British Thames Water Company, marking the beginning of China's investment in British infrastructure. With the rapid expansion of the size of foreign exchange reserves and the rapid depreciation of the US dollar, how to increase the value and value of China’s huge foreign exchange reserves has become one of the topics discussed in the industry. As the Chinese investment company, which controls China’s huge foreign exchange investment power, the experience accumulated in the bloody battles in overseas markets in recent years has opened up new channels and directions for the diversified use of China’s foreign reserves.

The real estate assets such as infrastructure and energy have become a new target for CIC’s overseas hunting. It is believed that investing in infrastructure in Europe and the United States is a very good trend, and it’s also a good time now. The Ministry of Commerce’s website recently released news that China’s sovereign wealth funds have invested in China’s The company (CIC) announced that it has purchased 8.68% of Thames Water, worth approximately £1.2 billion (approximately $1.8 billion). The Ministry of Commerce press release also quoted major British media reports saying that this was the largest Chinese merger in the UK and marks the start of China’s investment in British infrastructure. As soon as the news came out, people's attention was again focused on China's huge foreign exchange reserves.

Since its establishment in 2007, CIC’s overseas investment has not been smooth.

At the beginning of its establishment, most of CIC’s overseas investment targets were financial institutions, and the financial crisis that broke out and intensified in 2008 allowed CIC to step on the landmines.

In 2007, CIC, which is still in the process of preparation, invested $3 billion in FireWire to acquire Blackstone Group. However, the US subprime mortgage crisis quickly evolved into a global financial crisis. The stock prices of major US financial institutions drastically dipped. Blackstone Group was not spared, and the stock price fell below US$5 at the lowest price. CIC’s investment in Blackstone has so far lost nearly half of its value.

In December 2007, CIC, which had only been established for three months, spent another US$5.6 billion to invest in Morgan Stanley, with the intention of “bottoming the bottom”. However, due to the financial crisis, Damascus’ stock fell to around US$6 at one time, and it was not reconciled. CIC has invested an additional 1.2 billion U.S. dollars, but it still has huge losses.

In October 2008, a document released by the SEC on the liquidation of the reserve fund ReservePrimaryFund revealed that CIC had problems with the fund's $5.4 billion investment. According to the SEC filings, as of September 1, 2008, Stable Investment Corp, a subsidiary of China Investment Group, is the largest shareholder of the United States money market fund Reserve Primary. However, after the outbreak of the financial crisis, the ReservePrimaryFund was forced to write off its $785 million Lehman Brothers bond, which caused the net value to drop to $0.97, triggering a massive redemption surge. According to reports by Reuters at the time, the ReservePrimaryFund became the first U.S. money market fund to cause losses to investors since 1984. Subsequently, the fund announced a moratorium on redemption, and CICP’s US$5.4 billion in funds was frozen.

Not only that, the 2011 Japan earthquake also caused huge losses for CIC. According to the Wall Street Journal, from April to September last year, a shareholder named “SSBTOD05 Integrated Account Agreement Client” appeared in Toshiba Corporation. , Shiseido, Kirin Brewery, and Tokyo Electric Power Co., Ltd. and other top ten companies in Japan are listed in the shareholder registration form. It is understood that China Investment is a behind-the-scenes investor of the SSBTOD05 fund. The stock price shows that the stock price of Japan's Tokyo Electric Power Co., Ltd. on March 18 was 940 yen, which has fallen by nearly 55.7% compared with the closing price of 2,121 yen on the same day of the "3.11" Japan earthquake. According to media reports, CIC has invested approximately 35.9 billion yen (approximately 3 billion yuan) as a result of its indirect participation in Tokyo Electric Power Company.

The collapse of Blackstone, Morgan Stanley, the failure of money funds, and the failure of financial investments have allowed CIC to actively transform overseas investment strategies. From government and financial bonds to physical assets, energy, green fuel, infrastructure and other resource industries have become Vote for favored objects.

This can be seen from the CIC's annual reports for the past two years: Nie Duan has significantly increased the equity, fixed income, and alternative investment ratios in 2009, rising from 3.2%, 9%, and 0.4% to 36% and 26% respectively. At 6%, the cash ratio dropped from 87.4% in 2008 to 32% in 2009. In 2010, CIC significantly reduced the proportion of cash in its investment portfolio, increased direct investment, increased long-term asset investment, and further diversified its investment portfolio. The proportion of cash in the total portfolio fell sharply from 32% at the beginning of the year to 4% at the end of the year. The new investment was 35.7 billion US dollars. The investment in infrastructure and private equity was increased in accordance with the strategic asset allocation plan.

In terms of energy, in 2009 alone, CIC has invested in a number of energy companies such as Tektronix Resources, Nobel, Russia, SouthGobi Energy Canada, and GCL-Poly Energy Holdings Limited. In 2011, CIC’s disclosed mergers and acquisitions included 2.9 billion euros in the purchase of Europe’s largest LNG importer—a minority interest in the natural gas exploration and production division of Suez Energy Group, and the acquisition of a 25% stake in South Africa’s Shanduka for US$240 million. .

In infrastructure investment, CIC is targeting developed and emerging markets, mainly in North America and Asia. Through the acquisition of minority shareholders' shares in global high-yield infrastructure assets, CIC's investment in infrastructure includes green and new energy projects, as well as infrastructure funds.