The President of China Investment Corp, Gao Xiqing, has made his way to the U.S. with Wei Christianson, CEO and Managing Director of Morgan Stanley China, sparking rumours that the Chinese sovereign wealth fund may buy up to 49% of the beleaguered investment bank. Gao has been scheduled to meet Morgan Stanley executives in San Francisco after the New York-based company plunged 42% after Lehman Brothers filed for bankruptcy and Merrill Lynch sold itself to Bank of America.
AFP reports that the Chinese are pragmatic about their prospects:
When asked by China’s state-run Xinhua news agency, an unnamed CIC official did not rule out the prospect of buying a stake in Morgan Stanley but pointed to political hurdles in the United States over such a deal.
Even if the CIC intended to buy a stake, it could be very hard now as the purchase of a stake, even one smaller than 10 per cent, could be subject to the US government foreign investment review,’ the official said.
Meanwhile, conflicting reports are swirling around on CITIC’s interest in Morgan Stanley. Reuters reports that after CITIC’s near miss on Bear Stearns earlier this year, Beijing began Beijing began tightening approvals of investments by Chinese financial institutions overseas and any foreign investment worth “a considerable amount of money” will now require approval from the government before a legally binding agreement can be confirmed.
In a related development, the Government of Singapore Investment Corp, another of the world’s largest sovereign funds, has taken a more high-handed approach by suggesting it will explore an investment in Morgan Stanley if it is approached.