CIC sets its sights on ma­jor global role

China Daily (USA) - - BUSINESS - By CAI XIAO and FANGWENYU caix­iao@chi­

China In­vest­ment Cor­po­ra­tion is ex­pected to be­come the world’s largest sov­er­eign wealth fund in two years with as­sets to­tal­ing $1 tril­lion un­der management by that time, ac­cord­ing to its chair­man.

“We have laid solid foun­da­tions in the past nine years, and we will stick to our orig­i­nal aim of be­com­ing a world lead­ing and re­spectable sov­er­eign wealth fund,” Ding Xue­dong, chair­man and CEO of China In­vest­ment Cor­po­ra­tion, told Econ­omy & Na­tion Weekly.

China In­vest­ment Cor­po­ra­tion had as­sets to­tal­ing more than $810 bil­lion un­der management by the end of 2015, and its an­nu­al­ized growth rate of Sta­te­owned cap­i­tal reached 15.3 per­cent since CIC’s in­cep­tion, ac­cord­ing to CIC’s fi­nan­cial re­port of 2015.

“CIC’s as­sets un­der management will ex­ceed $1 tril­lion in two years based on this growth,” said Ding.

Niu Huay­ong, dean of the Busi­ness School at Beijing For­eign Stud­ies Uni­ver­sity, said it is within ex­pec­ta­tions that China In­vest­ment Cor­po­ra­tion will grow into the world’s largest sov­er­eign wealth fund.

“China In­vest­ment Cor­po­ra­tion has done a great job and an im­por­tant rea­son is that their lead­ers of the sov­er­eign wealth fund are am­bi­tious,” said Niu.

Li Shuguang, a law pro­fes­sor at China Uni­ver­sity of Po­lit­i­cal Sci­ence and Law, said dif­fer­ent from other coun­tries, the amount of China’s Sta­te­owned cap­i­tal is very huge and the na­tion’s sov­er­eign wealth fund is very strong.

“As the global econ­omy re­mains volatile, CIC is also trans­form­ing its strat­egy, in­vest­ment ar­eas and cor­po­rate gov­er­nance,” said Li.

Li sug­gested that with stronger in­vest­ment ca­pa­bil­ity, CIC can even fur­ther di­ver­sify its in­vestm e n t port­fo­lio.

Ding said CIC will pay at­ten­tion to al­ter­na­tive in­vest­ments, re­fer­ring to in­vest­ments in as­set classes other than stocks, bonds and cash, in the fu­ture and set up a sus­tain­able de­vel­op­ment mech­a­nism to pre­vent risks. Pre­vi­ously, CIC mainly in­vested in pub­lic eq­uity and fixed in­come.

CIC’s fi­nan­cial re­port for 2015 showed that due to volatil­i­ties in in­ter­na­tional fi­nan­cial mar­kets and for­eign ex­change losses trig­gered by an ap­pre­ci­at­ing US dol­lar, CIC's over­seas in­vest­ments gen­er­ated a dol­lar-de­nom­i­nated net re­turn of -2.96 per­cent in 2015 and a net cu­mu­la­tive an­nu­al­ized re­turn of 4.58 per­cent since CIC's in­cep­tion.

“We are di­ver­si­fy­ing our in­vest­ment,” said Ding. “CIC is in­creas­ing in­vest­ments in al­ter­na­tive in­vest­ment in­clud­ing pri­vate eq­uity, hedge funds, real es­tate and in­fras­truc­ture to achieve steady in­vest­ment re­turns and seek op­por­tu­ni­ties in emerg­ing in­dus­tries.”

Ding said it is co­op­er­at­ing with ex­cel­lent pri­vate eq­uity in­vestors to co-in­vest and to strengthen its ca­pa­bil­i­ties in di­rect in­vest­ment.

CIC is also ex­pand­ing real es­tate in­vest­ment in de­vel­oped coun­tries, af­ter set­ting up an in­de­pen­dent real es­tate in­vest­ment de­part­ment in 2015 which made nine deals last year. Li Xiang con­trib­uted to this story.

Ding Xue­dong, CEO of China In­vest­ment Cor­po­ra­tion

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