Rumors are swirling around Gao Xiqing, the general manager of the China Investment Corporation, and his visit to the United States. Gao is reportedly traveling with Wei Christianson, who runs Morgan Stanley’s business in China. Morgan Stanley’s stock values are plunging, and an anonymous source told Bloomberg that the state-owned CIC (which is China’s sovereign wealth fund) could buy as much as a 49 percent stake in the investment bank.
Meanwhile, another Chinese investment group, CITIC Securities, is denying rumors that it’s in talks to acquire Morgan Stanley, and says it has no interest in acquiring foreign banks during the credit crisis.
Alas, I don’t have much insight into the truth behind those rumors, but I did catch a talk that Gao gave in Redwood Shores yesterday to a small audience of finance industry professionals — mainly Chinese Americans, from what I could gather — before heading to New York. As you might expect, Gao didn’t offer any concrete statements on the Morgan Stanley rumor, but it was still interesting to hear the comments of a man recently named by Esquire magazine as one of the 75 most influential people of the 21st century (the magazine dubbed him “the investor of China’s money“) on U.S. financial markets, as well as his take on venture capital.
Someone asked Gao if he thinks the United States is a good area for investments right now. Again, Gao offered little specifics, but he did note that when the CIC was mulling its first investments last year, it actually tried to “underweight” the United States due to the subprime crisis — in other words, to invest less in U.S. firms than their role in the global economy might warrant. However, given the CIC’s connections (Gao went to law school at Duke University, for starters), U.S. investments like the CIC’s $3 billion stake in Blackstone were hard to avoid, which led to the impression that the CIC favors U.S. firms. That’s an assertion Gao denies.
Gao was also asked if he thinks the current financial crisis marks a turning point in the global economy — the comparison drawn by one speaker was to the fall of the Roman empire. It’s far too early to count the U.S. out, Gao responded, although some shift in global financial power is probable.
One audience member, Greg Tarr of CrossPacific Capital, asked Gao about his view on investing in venture capital firms. Gao said the CIC has a small portion of its budget allocated for venture capital, but overall he says the venture market is too risky for a substantial investment. That doesn’t preclude opening an office in Silicon Valley or elsewhere in the United States, he said, and the CIC does speak to venture firms and high-tech companies regularly. In fact, Gao said he visited the Google campus in Mountain View earlier that day.
“Personally, I’m a strong believer in the development of technology and scientific programs, but that’s very different [from my investments at CIC],” he said.
[Image from Esquire]
