CIC buys Morgan Stanley Japanese mortgage asset investment style turns conservative

China Foreign Reserve 2010 net sale of Japanese government bonds 37.4 billion newspaper reporter Tao boat Beijing reported that CIC is the focus of the people's attention whenever it is. February 21, the market news that the CIC United Blackstone Group (BlackStone, also translated Blackstone), at a price below 1.1 billion dollar value, from Morgan Stanley bought a Japanese real estate loan portfolio, the price equivalent to 35% of the book value of the asset.　　The deal was reached last year, the source said.　　Xiqing, general manager of CIC, said recently that CIC would reduce its investment in developed markets (which currently accounts for 85% of its investment activity) and increase its investment in emerging markets, meaning that CIC's investment style is changing. "CIC buys a loan portfolio, or the international market, especially the Japanese market is very understanding, or is a professional advice, buy the real estate loan portfolio to make no loss," Beijing, a foreign fund investment manager in private to reporters, "otherwise if completely do not understand this aspect, rashly shot, There is a certain risk.　　"Unlike CIC's entry into the Japanese market, the reserves sold 37.4 billion yen in 2010, especially in August and September, respectively, with a net sale of 2.02 trillion yen and 144.9 billion yen of Japanese government bonds, once out of the 2010-year purchase of Japanese government bonds."　　The CIC and Blackstone reporter looked at the data that most of the Japanese real estate loans held in Morgan Stanley were issued between 2005 and 2007, a time when the Japanese market was slowly recovering, and it seemed hard to understand that at this point the sale of 35% per cent of the book value of the assets to CIC and Blackstone appeared somewhat incomprehensible. "In terms of trading alone, the Japanese real estate market has gone through a long period of downturn and is beginning to be in a recovery phase, which should not be too risky to buy."　　"Hua Mulan (Beijing) Investment Management Co., Ltd. investor Wu Jufeng told reporters, not to mention the CIC and Blackstone willing to take over, to some extent, that 35% of the discount can make money." Sources said that Morgan Stanley's portfolio of these loans have both outstanding loans and non-performing loans, originally intended to be divided into securities, the commercial mortgage backed securities market, but the outbreak of the global financial crisis disrupted the plan. And as markets stabilise, Morgan Stanley approached CIC to gauge its interest in buying the portfolio. "Morgan Stanley has lost a lot of money in the financial crisis, and the sale of the asset is likely to be dealing with assets to increase liquidity."　　said the person.　　Interestingly, the reporter found that as early as July 2010, a source has pointed out that Blackstone will finalize the purchase of Morgan Stanley's real estate loans, which is the Blackstone Group's first investment in Japan, the Japanese media pointed out that Blackstone's purchase of these loans is intended to resell it to a third party or sell collateral profits. Only a few months later, CIC appeared on the list of purchases and joined forces with BlackstoneAcquisitions, most of which are funded by CIC. According to insiders, CIC should have relevant professionals to invest in such assets, and reporters later noted on CIC's official website that CIC had recruited 3 investment management positions in the European market, North America and Japan and emerging markets as early as 2007.　　But one investment manager said privately that Blackstone's rich experience in the village could have a bigger share of the deal than the first-ever-involved CIC. Both Blackstone and Morgan Stanley are inextricably linked to CIC.　　CIC, an investor in Blackstone and Morgan Stanley, is still in the middle of a loss of money. The move to conservative investment has been foreshadowing in the industry, the deal between Blackstone and CIC in partnership with Morgan Stanley has in some way meant a shift in the investment style of CIC.　　CIC is more likely to invest in energy companies, such as Poly-GCL Energy Holdings Limited, Eis Power, and other financial-asset companies, than it has in the past for long-term financial investments such as Blackstone and Morgan Stanley. In this respect, CIC deputy general Manager and chief risk officer Jianxi Wang as early in the media interview that admitted: "Given the low risk tolerance of SWFS, the case for future foreign investment in CIC, such as the acquisition of financial assets such as Blackstone and Morgan Stanley, will be halted, and similar asset allocations will not be expanded in the future. "On CIC's official website, the reporter noted that CIC would invest mainly in equities, fixed income and alternative assets offshore, with alternative asset investments including hedge funds, private equity markets, commodities and real estate investments, etc., covering both developed and emerging markets."　　According to Jianxi Wang as, the future of CIC's high-risk financial investments will be diluted to a smaller proportion.　　Perhaps for this reason, the foreign media believe that CIC is much more interested in buying non-performing loans, becoming a more active investor rather than passively paying high fees while watching earnings shrink. In fact, in an interview with a reporter for an industry investment fund, many investment managers have said that there is little exposure to overseas loan assets, "even if the purchase of bonds, but also buy some convertible bonds, and hold the time is not long, meet the right opportunities to sell cash, after all, this part of the investment although the relatively stable income, But the gains from equity investments are far worse.　　"But it may be more important for CIC to carry a huge loan interest every day, and a relatively stable return."　　Coincidentally, Blackstone is eyeing bad loans at the same time as CIC's interest in non-performing loans, and last July, Japanese news announced that Blackstone was negotiating with Bank of America to deal with BofA's Asia-dominated 2 billion dollar real estate investment, while talking to Morgan Stanley about Japanese real estate loans. Meanwhile, as Blackstone looks to emerging markets such as Asia, CIC general Manager Xiqing also said recently that CIC would reduce investment in developed markets, which currently accounts for 85% of its investment activity, and instead increaseInvestment in emerging markets. Perhaps, as Jianxi Wang as has said before, the success of CIC's overseas investment cannot be concluded prematurely. Even in a loss-making project such as Blackstone, CIC may be able to balance gains in the future by lengthening its holding time.