China Investment Corporation, the country's sovereign wealth fund, will increase its stake in China's three biggest state-owned banks in a move to boost market confidence, Wang Jianxi, CIC's vice general manager, said on Wednesday in remarks to reporters on the sidelines of the annual Chinese People's Political Consultative Conference (CPPCC) session.

"We (CIC) will choose an appropriate time to raise our holdings [in the Big 3 banks] in response to the government's appeal to stabilize the market and boost market confidence," Wang said.

Wang suggested CIC may increase its holdings of H shares in the Big 3 banks, given that the fund's major focus is on overseas investment.

Cautious approach to overseas financial assets

Wang said that CIC will adopt a cautious approach on investment in overseas financial institutions.

"We will follow a highly diversified investment strategy," said Wang, adding that the company prefers long-term investments and portfolio investment.

Since its foundation in 2007, CIC has faced domestic criticism after its first two major investments, in Morgan Stanley and Blackstone, turned out to be loss-makers. Last year, CIC attracted more attention at home when its investment in the Primary Fund was frozen after the Fund crashed as a result of the crisis.

Wang said that CIC has recovered 86 percent of its investment in the Primary Fund and its final losses will be very small as the Fund is continuing to convert assets into cash and repay investors.

Investment strategy shift

The CIC plans to step up its investment in natural resources, as the financial crisis continues to deepen.

"Judging from current conditions, resources assets are undervalued," said Wang, adding that the CIC is considering such investments.

Earlier reports said that CIC has held talks with Fortescue Metals Group, Australia's third-largest iron ore exporter, about taking a possible stake in the group.

(China.org.cn March 5, 2009)