Chinese Fund May Be Biggest Fool Thursday, October 16, 2008 1:08 PM By: Julie Crawshaw Article Font Size As much as $5.4 billion of Chinaâs $200 billion sovereign wealth fund could be frozen due to a U.S. money market account that failed, the Financial Times reports. U.S. regulatory filings show that a China Investment Corporation (CIC) subsidiary was the biggest institutional investor in Reserve Primary Fund, a $62 billion money market fund that was the oldest such fund in the United States, and which recently closed its doors. Until recently many investors considered money market funds to be as safe as bank accounts. However, Reserve Primaryâs net asset value fell below $1 last month when the fund was forced to value $785 million of Lehman Brothers debt securities at zero following the investment bankâs demise. The revaluation prompted frightened investors to withdraw $10 billion at $1 per share before shares fell to 97 cents and Reserve Primary froze redemptions. The freeze is the latest in a string of bad news for Chinese investments and may well add fuel to a political backlash already underway, observers say. According to The Wall Street Journal, much of the assets remaining in the money-market fund are bank commercial debt that appears sound but could lose value before it matures late next year. Bloomberg reports that CIC also invested $3 billion in Blackstone private equity and more than $5 billion in Morgan Stanley last year â and its subsidiary parked another $5.9 billion in three other money market funds. Overall, these shares have dropped more than 70 per cent since China purchased them. Â© 2008 Newsmax. All rights reserved.