The painful lesson of bargain-hunting

In February 2007, the subprime mortgage crisis broke out in the United States, which immediately swept the global economy and had a great impact on the financial markets of various countries. First, many subprime mortgage companies in the United States suffered serious losses. On April 2, 2007, New Century Financial Company, the second largest subprime lending institution, announced that it had filed for bankruptcy protection and laid off 54% of its employees. Then, the subprime bond crisis caused huge losses to financial institutions in Wall Street and the United States, and financial markets in Europe and Asia also fell sharply. On April 8, 2008, the IMF said that the global subprime mortgage losses reached 1 trillion dollars.

The subprime mortgage crisis in the United States has also brought a huge impact on China's foreign exchange reserve management. Because the central bank of the United States cut interest rates eight times in a row to overcome the impact of subprime mortgage, the federal funds rate in the United States dropped from 5.75% in August 2007 to 2.00% in April 2008. After the Federal Reserve cut interest rates, American short-term bond yields continued to fall. A large number of foreign exchange reserve assets in China are mainly US Treasury bonds, especially short-term and medium-term treasury bonds. According to statistics, as of May 2008, China held US$ 506.5 billion in US Treasury bonds, making it the second largest holder of US Treasury bonds after Japan. Moreover, in the last year, Japan continuously reduced its holdings of US Treasury bonds by $36.3 billion, while China increased its holdings by $99 billion. The overall decline in the yield of US Treasury bonds has greatly reduced the yield of China's foreign exchange reserve assets. In order to curb inflation caused by foreign exchange, China raised interest rates for six consecutive times in 2007, and the domestic interest rate has been raised from 2.52% to 4. 14%, and the interest rates in China and the United States have been upside down. In order to offset the excess liquidity caused by foreign exchange, the central bank has to continuously issue central bank bills for open market operations, and its coupon rate has exceeded the interest rate of US Treasury bonds. Therefore, the yield of China's foreign exchange reserve assets has been far lower than the regulatory costs brought by these reserve assets.

More seriously, the international financial market turmoil triggered by the subprime mortgage crisis has caused huge losses to the overseas investment of China's foreign exchange reserves. In May 2007, CIC spent about $3 billion to buy nearly 10% of the shares of Blackstone Group in the United States, and now the book loss of this investment has approached1600 million dollars. In the unfavorable situation of the first attack, CIC tried to copy Morgan Stanley's convertible equity units in the United States. According to the fourth quarter report of 2007 released by Morgan Stanley, the company lost $3.59 billion in the fourth quarter, while the net profit in the same period last year was $2.265438 billion+$0 billion. The sharp decline in performance led to a sharp drop in share prices. As the impact of the current subprime mortgage crisis is far from over, we can't assess the losses for the time being.

As another part of the reform of the national foreign exchange investment system, QDII has also begun to participate in foreign markets in an attempt to gain global benefits. However, due to the impact of the subprime mortgage crisis on the Asian market, Hong Kong stocks have become the "hardest hit", and most QDII in the fund sector is linked to Hong Kong stocks. As a result, the net worth of the four major overseas funds has fallen to around 0.7 yuan. Assuming that the size of each fund is basically maintained at about 30 billion shares, the total size of the four funds is about 654.38+02 billion shares. According to this calculation, by the beginning of March 2008, its overall loss has reached 365.438+008 billion yuan. And a QDII of Minsheng Bank, because of a huge loss of 50% in four months, suffered the bad luck of liquidation.