CIC sees investment potential in Russia

Xinhua, 25.05.2011

MOSCOW – Chinese companies can find rich investment opportunities in Russia through its planned direct investment fund and a new round of privatization, says China Investment Corporation chairman Lou Jiwei.

Lou, who was invited to attend an international investment seminar, told Xinhua that Russia is a big market, with competitive economic sectors and development potential.

Lou said the CIC, a sovereign wealth fund responsible for managing part of China’s foreign exchange reserves, is willing to invest in Russia. He pointed out, too, that the global assessment of Russia’s investment environment has not been very good and many Chinese companies behave cautiously.

Therefore, in order to minimize the risks, he suggested, Chinese companies could seek opportunities though cooperation with Russian governmental institutions.

He especially mentioned two channels for possible investment in Russia - the planned Direct Investments Fund and the new round of privatization.

Russian President Dmitry Medvedev in 2010 initiated the idea of creating a Direct Investments Fund, hoping the fund could raise $10 billion within five years and attract foreign capital.

“The Direct Investments Fund could be a flexible way to attract foreign investment, which can help overseas investors to work together with the Russian government, to find and assess the projects they need in Russia,” Lou said.

The Chinese investment fund chairman also highlighted the positive trends, including the privatization, in the Russian economy.

“Russia came through the global financial crisis test. With the help of correct regulations, the country returned to the way of recovery pretty fast,” he said.

He believed Russia has learned much from the crisis and has been diversifying its economy in order to reduce the country’s dependence on oil and gas export.

Russia even has started privatization of the oil sector, which used to be fully monopolized, he said.

“So we feel the spirit of change and we wait for new possibilities,” Lou said, adding Chinese participants in the Russian market would seek a reasonable balance between the projects profitability and risks.

As for CIC, Lou said the company’s potential portfolio in Russia is likely to include stocks and bonds, commodities, infrastructure and real estate projects to reduce investment risks by diversification.

“We hope Russia’s investment landscape will keep improving and we expect the Direct Investments Fund can facilitate to neutralize the risks,” Lou said.