Lou Jiwei, the chairman and chief executive of China Investment Corp (CIC), said the fund would now avoid investing in banks and other groups because of "uncertain" foreign government policies, the Wall Street Journal reported.

The fund has been a major investor in such groups since it was formed last September.

"We don't know when these institutions will be invested in by their governments," Lou said during a panel discussion in Hong Kong, part of a conference hosted by former US President Bill Clinton, the Journal said.

"We have to wait for a time when there won't be massive collapses of financial institutions."

Lou added he had "lost confidence from the lack of consistent government policies concerning support for Western banks. There is really no protection on my investment," the report said.

CIC bought a 9.9 percent stake in Morgan Stanley last December and also owns more than 10 percent of private-equity firm Blackstone, after upping its original stake as recently as October.

The fund has faced severe criticism in China for its investment choices, as the collapse of global markets has led to heavy paper losses on the value of the stakes.

However, Lou said he would continue to look for other foreign investment opportunities, including companies in developing markets.

Sovereign wealth funds are huge pools of taxpayers' cash that some governments have used to invest in companies and markets across the world.

Some have faced criticism for choosing high risk investments and operating secretly.

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