Such investments are not new — Singapore and Korea have been doing this for a number of years now. Singapore’s Government Investment Corp (GIC) and Korea Investment Corp (KIC) have been investing a large part of their reserves in a variety of top grade corporate and sovereign bonds, equities and real estate holdings spread across the globe.

By investing $3 billion of its reserves with Blackstone, China has also initiated the move away from US treasuries to more profitable equity holdings. Other Asian

countries like Malaysia and Thailand are also examining ways of lowering their exposure to low yield US bonds.

BIG MONEY, LOW RETURNS

• RBI gets low returns on forex deployment in low-yielding securities abroad

• Sen Gupta says forex should be deployed in high return areas like equity, real estate and private equity companies

• By diverting resources from physical investment and employing them for reserve accumulation, India lost $18 bn in 2006-07