10/05/2011 05:49 EDT | Updated 12/05/2011 05:12 EST

Caisse de depot's Michael Sabia says Quebec not immune to market turbulence

QUEBEC - Despite its massive size, Quebec's Caisse de depot isn't necessarily safe from the turbulence shaking global economic markets, chief executive Michael Sabia said Wednesday.

Canada's largest pension fund manager has become much more solid and flexible in the last few years, Sabia told reporters after a speech to the Quebec City Chamber of Commerce.

''Beginning two years ago we did a lot to strengthen the Caisse's foundations," he said. ''We have more agility and more flexibility."

''But if you're asking me whether the Caisse is immune to the extreme and difficult situations in the markets, my answer would be, that is impossible.''

The pension fund manager has restructured since losing 25 per cent of its assets in the global financial crisis in 2008, including billions of dollars in its purchase of asset-backed commercial paper.

Sabia was asked what impact the current economic meltdown might have on the Caisse's full-year results, which will come out in February.

''Obviously, the situation on the markets is excessively turbulent and we're currently using our agility to face those circumstances," he said. ''But, once again, the Caisse is not immune to the enormous turbulence in the markets.''

The Caisse manages funds for public and private pension and insurance plans. At the end of 2010, it held $151.7 billion in net assets.

As of last June 30, that figure stood at $157.9 billion.

But that was before the stock market began its August roller-coaster of ups and downs as fears intensified over the eurozone debt crisis and the slumping U.S. economy.

Sabia took aim at Europe's political leaders, saying they need to act soon — and decisively — to deal with the crisis.

''It's important that they make decisions — and quickly,'' he said.

''If it takes months and months'' to react, the Quebec economy could be adversely affected, he added, reflecting similar remarks over the last few days by federal Finance Minister Jim Flaherty.

But Sabia also expressed optimism, saying ''we're convinced that our companies can thrive in world markets."

''...We believe that the best way to help the Quebec economy is to help it expand globally. ... When a Quebec company invests abroad, it becomes stronger and Quebec becomes richer.''

And he said the Caisse will look at investments in infrastructure in developed and developing countries alike.

He cited an Organization for Economic Co-operation and Development study that predicts infrastructure investments worth 40,000 billion dollars globally over the next 20 years.

Sabia also said the Caisse wants to reduce the number of companies in which it invests.

Currently, the pension fund manager is involved with about 500 firms. ''Can we really have a deep understanding of each of these companies in which we've invested? The answer is simply, 'No.'

''We will concentrate our investments in fewer firms so that we can have a deeper analysis of each one.''