SAFE Investment Company (China)

What Is SAFE Investment Company (China)?

The SAFE Investment Company is the Hong Kong branch of the Chinese sovereign wealth fund. SAFE is an abbreviation for State Administration of Foreign Exchange. SAFE's Hong Kong subsidiary opened in 1997 with $20 billion in capital. Today, the SAFE Investment Company is a private company, be that as it may, authorities from the Chinese State Administration of Foreign Exchange (SAFE) department serve on its Board of Directors. The fund is set to the side principally as a foreign currency reserve.

Understanding SAFE Investment Company (China)

As of January 2021, China holds roughly $3.2 trillion in foreign currency reserves. The SAFE Investment Company can invest in a wide assortment of instruments including foreign and domestic equities and fixed income securities. The chief objectives of the SAFE Investment Company are to gain investment returns, increase diversification of holdings and to reduce China's exposure to vacillations in the value of the U.S. dollar. Starting around 1997, all SAFE operations are embraced by the [Peoples Bank of China](/people groups bank-china-pboc) (PBoC).

SAFE Investment Company (China) and Sovereign Wealth Funds

The majority of developed nations have sovereign wealth funds (SWF) that they send in different ways to benefit the country's economy and residents. Likewise with SAFE in Hong Kong, the funding for a sovereign wealth fund comes from accumulated central bank reserves from budget and trade excesses.

A few countries have made SWFs to expand their revenue streams. For instance, the United Arab Emirates (UAE) utilizes a portion of its SWF to invest in assets separate from oil, the principal driver of their economy. This safeguards the country against any oil-related risk, like the development of alternative energy advances. As per Statista's February 2021 rankings, the main ten sovereign wealth funds by assets under management (AUM) in billions are as per the following:

1. Norway's Government Pension Fund (Norway): $1273.54
2. China Investment Corporation (China): $1045.72
3. Abu Dhabi Investment Authority (UAE): $579.62
4. Hong Kong Monetary Authority Investment Portfolio (China-Hong Kong): $576.03
5. Kuwait Investment Authority (Kuwait): $533.65
6. GIC Private Limited (Singapore): $453.2
7. Temasek Holdings (Singapore): $417.35
8. Public Investment Fund (Saudi Arabia): $399.45
9. National Council for Social Security Fund (China) $327.07
10. Investment Corporation of Dubai (UAE): $301.53

In the United States, the Alaska Permanent Fund ticks in at $72 billion, and the Texas Permanent School Fund has $48.2 billion. Both have strong starting points in oil and natural resources and were laid out in 1976 and 1854, separately.

Features

• SAFE represents State Administration of Foreign Exchange, and the fund is as of now supervised by the Peoples Bank of China (PBoC).
• The SAFE Investment Company is China's sovereign wealth fund's Hong Kong operations.
• The chief objectives of the SAFE Investment Company are to gain investment returns, increase diversification of holdings and to reduce China's exposure to variances in the value of the U.S. dollar.
• The Hong Kong subsidiary opened in 1997 and centers around keeping up with foreign currency reserves.