| Recent years, since the price continue rised such as oil and the twin surplus ofemerging market countries, many countries have accumulated a huge fiscal surplusand foreign exchange reserves. In order to preserve or increase national wealth,countries have started to set up sovereign wealth funds which are growing rapidly asthe outstanding contribution to the stability of financial markets during the financialcrisis. China has set up sovereign wealth funds in2007, aim to diversify the country’sforeign exchange assets. What kind of investment strategy will Chinese sovereignwealth funds choose during foreign direct investment in face with such a large-scalecapital? Which direction is foreign direct investment effect? positive or negative?How to improve the performance of foreign direct investment?This article selects the invested overseas listed companies of Chinese sovereignwealth funds in the period from2007to2013as samples. International standard eventstudy method, OLS regression model and t-test are used to calculate the abnormalreturns and abnormal returns, in order to evaluate the effect of short-term investments.Then this article evaluates the effect of long-term investments using buy and holdexcess earnings method. The results indicate that:(1) Chinese sovereign wealthfunds’ foreign direct investment has a positive effect in the short term, which issignificantly stronger than the effect of global investment in the overall sample;(2)Chinese sovereign wealth funds’ foreign direct investment has a negative effect in thelong term and has a greater decrease in buy and hold excess returns, which means thatin the long run, the effects of Chinese sovereign wealth funds long-term investment isworse than global sample. After evaluating the effects of short and long term oninvestments innovatively, this article gives suggestions for Chinese sovereign wealthfunds’ investment strategy from the perspective of enterprises and governmentrespectively. |
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