ANALYSIS-China in no rush to snap up credit crisis bargains

By Eadie Chen

BEIJING, Jan 22 (Reuters) - To buy or to wait: the hunger of global banks for fresh capital just as share prices worldwide are plunging is giving China a crash course in market timing.

China is awash with cash. But with the global credit crunch getting worse and the investments Beijing has already made deep under water, policy makers are hesitant about striking new deals.

Media reports say the authorities last week blocked at the last minute a plan by China Development Bank to buy into Citigroup Inc (C.N), one of several banks that need to replenish capital wiped out by big subprime-related losses.

Some economists argue that excessive caution might cost China the chance to buy into Wall Street at depressed valuations.

But others say that Beijing, as a newcomer on the global financial stage, is right to watch and wait, especially as even bigger bargains could be on offer before long.

"It's absolutely necessary for China to pause now for a while and revaluate their past investments. A novice swimmer needs time to know how deep the water is," said Zuo Xiaolei, a senior economist at China Galaxy Securities in Beijing.

China launched its $200 billion sovereign wealth fund, China Investment Corp (CIC), only in September, while its big state-owned banks started venturing abroad just recently.

And the timing of their first deals, at what turned out to be the top of the cycle, could hardly have been worse.

Shares in Blackstone Group (BX.N) have shed almost 40 percent percent from the firm's $31 debut price in June. CIC pumped $3 billion into the U.S. private equity giant before its IPO.

China Development Bank, which lends at the direction of the government, spent 2.2 billion euros ($3.14 billion) last July on a 3 percent stake in Barclays (BARC.L). Shares in the British bank have also fallen 40 percent since then.

And Morgan Stanley's (MS.N) share price has fallen about 10 percent since CIC made a $5 billion investment last month.

WOUNDED MORALE

"These are long-term investments so book losses may not be too much to worry about, but it's not good for China's morale as the whole foreign foray has just started," Zuo said.

So it was understandable when Citigroup came knocking at its door that China had second thoughts and chose to err on the side of caution, she added.