Banking & Finance

Turtle attracted by nest egg

Zhu Changhong comes home to guard foreign exchange fortune

Turtle attracted by nest egg

Zhu will have a lot of these to manage

They are known as the “sea turtles” – Chinese nationals that return home after a period of studying and working abroad. Returnees have been a rare breed. More than a million people that have left China to study over the last three decades, but only a quarter have come back.

The recent financial turmoil in the West may be offering an opportunity to lure more talent home. And the foreign currency regulator, the State Administration of Foreign Exchange (SAFE), is one of those keen not to miss out on the moment. In fact, in poaching top fund manager, Zhu Changhong, from a major US investment house, it can claim to have the catch of the season.

Zhu will become the chief investment officer of SAFE’s Reserves Management Department. In this role – he’ll start next month – he will be helping to manage $2.3 trillion, the world’s largest foreign exchange reserves. It’s a pretty senior position: one newspaper, the 21CN Business Herald, is already dubbing him the “National Chief Investment Officer”.

Zhu’s past experience makes him a strong fit for his new position. He is currently finishing a decade-long stint at Pacific Investment Management Co (Pimco), the Californian investment powerhouse that runs the world’s largest bond fund. He started out at Pimco as a portfolio manager and ended up managing a $23 billion hedge fund . At Pimco he also built up an expertise in US government and agency bond trading. That will come in handy; $1.2 trillion of China’s reserves are held in US treasuries and agency debt.

“The top priority for China’s foreign-exchange investment is to ensure its safety and, if possible, higher returns, so hiring people like Zhu can certainly help facilitate that goal,” Zhao Qingmin, an analyst at China Construction Bank told Bloomberg.

The government may also ask him to help out with a few lessons on derivatives for confused state-owned firms. One of the big financial stories of 2009 centred on foreign banks and the financially-disastrous ‘hedging’ contracts they’d sold to SOEs. State firms were left on the hook for massive losses. The government was so angered by some of the sales practices that it publicly threatened to renege on the trades. Perhaps Zhu can prevent a repeat of the debacle.

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