While some believe the crisis has presented many attractive investment opportunities for China, Dag Detter, former President of Stattum and Senior Advisor at Terra Firma says China should be extra cautious regarding investments in the financial sector. Huang Yiping, Chief Asia Economist of Citigroup, agrees with the point.

Dag said: “The challenges for China in building up a professional asset management function and utilising the current economic cycle fall mainly into three areas: Firstly, pricing and M&A because finding the right timing takes considerable experience. The current lack of visibility of earnings and risk requires a thorough knowledge of the underlying assets and sector in question to find the correct risk/return ratio.

Secondly, operational management is crucial and the question is essentially whether a Chinese SWF is best served by taking minority stake or control. This depends on what the objective is – corporate strategy or return on investment -- as well as if the enquiring entity have the relevant experience for the intended strategy.

Another important consideration is public opinion. Is the acquiring entity properly resourced to engage domestic issues that arise in the host country?”

Dag added: “If western regulators and market players struggle to price assets and liabilities in the financial sector, China will find it even more difficult, especially as risk pricing is still in its infancy. Then again, history has shown that bold moves can pay off. Overall, I think that cautious interest in potential value opportunities is the best stance for China to take in the current circumstances.”

Dag noted that industrial assets on the other hand are a different question though, because prices in most sectors are currently more transparent.