China wealth fund eyes bargains from subprime woes

BEIJING, Nov 29 (Reuters) - China Investment Corp (CIC), the country's new sovereign wealth fund, will invest in financial institutions hit by the meltdown in subprime mortgages, the head of the fund said on Thursday.

CIC head Lou Jiwei said the fund would need to prepare for at least a year before it was be ready to make major overseas investments.

The fund's initial capitalisation is $200 billion, but only a third of that is earmarked for investment overseas.

CIC would invest most of the overseas portion in publicly traded products, with only a relatively small share going into alternative products, Lou told a financial forum.

But he said the fund would not rule out direct investment opportunities.

CIC was set up in September with a mandate to seek higher returns on part of China's foreign exchange reserves, which totalled $1.455 trillion at the end of October.

He said CIC needed to earn at least 300 million yuan a day just to break even. (Reporting by Zhou Xin, Eadie Chen and Jason Subler; Editing by Edmund Klamann)