Sovereign fund CIC’s over­seas in­vest­ments swing into the black

China Daily (Hong Kong) - - BUSINESS - By LI XIANG lix­i­ang@chi­nadaily.com.cn

China’s sovereign wealth fund China Investment Corp on Tues­day posted a 6.22 per­cent re­turn on its over­seas in­vest­ments last year, re­vers­ing a loss in the pre­vi­ous year.

The investment gain, com­pared with the neg­a­tive 2.96 per­cent re­turn in 2015, was boosted by a rally in the stock mar­kets in the US and Europe, as well as ac­tive ad­just­ment of CIC’s investment port­fo­lio, Li Wen­ping, man­ag­ing di­rec­tor of CIC’s de­part­ment of finance, told re­porters at a news con­fer­ence.

The $813.5 bil­lion sovereign wealth fund re­ported a to­tal net profit of $75.3 bil­lion last year, up from $73.9 bil­lion in the pre­vi­ous year, ac­cord­ing to its 2016 an­nual re­port re­leased on Tues­day.

CIC is seek­ing to in­crease in­vest­ments in in­ter­na­tional in­fra­struc­ture projects, longterm as­sets such as prop­erty and pri­vate eq­uity, and to tap into the op­por­tu­ni­ties gen­er­ated by the Belt and Road Ini­tia­tive, said CIC spokes­woman Liu Fangyu.

The fund is also look­ing at boost­ing its direct in­vest­ments, in­clud­ing in­fra­struc­ture and prop­erty projects in the US.

The US re­mained the big­gest investment des­ti­na­tion for the Chi­nese fund with investment val­ues ex­ceed­ing per­cent $90 bil­lion, accounting for about 42 per­cent of its to­tal over­seas investment last year, ac­cord­ing to Liu. The fund set up its New York of­fice in 2015 to ex­plore investment op­por­tu­ni­ties there.

“Our investment port­fo­lio in the US is very un­bal­anced com­pared with our global port­fo­lio as it is mostly in­vested in the US pub­lic mar­kets,” Liu said.

“We are up­beat about the China-US eco­nomic re­la­tions and hope the US govern­ment can cre­ate a more open and fair en­vi­ron­ment for for­eign in­sti­tu­tional in­vestors like CIC,” she added.

To di­ver­sify its global investment port­fo­lio, CIC es­tab­lished a sub­sidiary in 2015 to carry out direct in­vest­ments in over­seas mar­kets. In 2016, the fund signed 16 direct investment deals worth about $5 bil­lion.

The sovereign wealth fund has also been ac­tive in the cur­rent year. Last month CIC agreed to buy Euro­pean lo­gis­tics prop­erty firm Logi­cor for $13.95 bil­lion from Black­stone Group LP.

Com­ment­ing on the investment out­look for 2017, CIC Pres­i­dent Tu Guang­shao said in the re­port that po­ten­tial risks were pol­icy changes in for­eign coun­tries and in­creas­ing un­cer­tainty in global pol­i­tics.

Nu­mer­ous rounds of pol­icy eas­ing by the ma­jor economies have led to greater cap­i­tal com­pe­ti­tion, which will add pres­sure on investment re­turns, Tu said.

By the end of 2016, the fund al­lo­cated about 46 per­cent of its as­sets in pub­lic equities mar­kets, 15 per­cent in fixed­in­come prod­ucts, and the rest in other as­sets — such as hedge funds and pri­vate equities and cash prod­ucts — ac­cord­ing to its an­nual re­port.

Our investment port­fo­lio in the US is very un­bal­anced com­pared with our global port­fo­lio ... ”

Liu Fangyu, CIC spokes­woman China Investment Corp’s re­ported re­turn on over­seas investment last year

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