BEIJING/SHANGHAI: China Investment Corp (CIC), the country's $400 billion sovereign wealth fund, said it was cautiously optimistic about its investment outlook this year, after posting an 11.7 percent return on offshore investments in 2010.
The robust performance, achieved last year as CIC boosted overseas investment by $35.7 billion while nearly depleting its cash holdings, could bolster its case to win additional government funding.
"The international investment environment is getting more complicated, and there's great uncertainty towards sustained global recovery and growth," CIC Chairman Lou Jiwei said in the fund's 2010 annual report on Tuesday, July 26, citing factors such as the euro zone crisis and surging commodities prices.
"We're prudently optimistic about 2011. The global economy will continue to recover, but the future path will not be even."
CIC made the same 11.7 percent return in 2009.
CIC, which was set up in 2007 with a mandate to diversify part of China's foreign currency reserves into riskier overseas assets, has repeatedly called for fresh capital injection from the government as it stepped up investment immediately after the 2007-2008 financial crisis.
CIC made $35.7 billion in fresh offshore investment last year, with a focus on infrastructure projects, private equity investment and real estate trusts (REITs).
Reflecting the stronger appetite for riskier assets, CIC raised its equity investment to 48 percent of its portfolio from 36 percent in 2009, while increasing the portion of alternative investments, which include real estate and commodities, to 21 percent from 6 percent.
In contrast, CIC slashed its cash holdings to 4 percent of the portfolio from 32 percent a year earlier, while the proportion of fixed income investment rose to 27 percent from 26 percent.
In a sign that CIC is shifting toward emerging markets, investment in Asia-Pacific rose to 29.8 percent of the portfolio from 28.4 percent a year ago, while investment in Africa rose to 1.2 percent from 0.9 percent. North America accounted for 41.9 percent of the portfolio, down from 43.9 percent in 2009.
OVERSEAS EXPANSION
CIC, which made ill-timed investments in Morgan Stanley and Blackstone just before the financial crisis, has benefited from rebounding global markets.
The MSCI world equity index rose 10.4 percent in 2010, and has gained 4.6 percent so far this year.
"Sound performance could help CIC earn trust and win fresh funding from the central government," said Echo Zhu, analyst at fund consultancy Z-Ben Advisors.
"Meanwhile, CIC is increasingly active in its overseas expansion and investment, aiming to grow its own investment expertise."
Underscoring its ambition to become a global player, CIC opened its first overseas subsidiary in Hong Kong last November and opened an office in Canada's Toronto in January.
The fund has also doubled its workforce to nearly 500 from about 250 at the end of 2009, part of efforts to boost its overseas investment capabilities.
Currently, CIC manages 41 percent of its global portfolio directly, with the remainder managed by third-party money managers. - Reuters
The robust performance, achieved last year as CIC boosted overseas investment by $35.7 billion while nearly depleting its cash holdings, could bolster its case to win additional government funding.
"The international investment environment is getting more complicated, and there's great uncertainty towards sustained global recovery and growth," CIC Chairman Lou Jiwei said in the fund's 2010 annual report on Tuesday, July 26, citing factors such as the euro zone crisis and surging commodities prices.
"We're prudently optimistic about 2011. The global economy will continue to recover, but the future path will not be even."
CIC made the same 11.7 percent return in 2009.
CIC, which was set up in 2007 with a mandate to diversify part of China's foreign currency reserves into riskier overseas assets, has repeatedly called for fresh capital injection from the government as it stepped up investment immediately after the 2007-2008 financial crisis.
CIC made $35.7 billion in fresh offshore investment last year, with a focus on infrastructure projects, private equity investment and real estate trusts (REITs).
Reflecting the stronger appetite for riskier assets, CIC raised its equity investment to 48 percent of its portfolio from 36 percent in 2009, while increasing the portion of alternative investments, which include real estate and commodities, to 21 percent from 6 percent.
In contrast, CIC slashed its cash holdings to 4 percent of the portfolio from 32 percent a year earlier, while the proportion of fixed income investment rose to 27 percent from 26 percent.
In a sign that CIC is shifting toward emerging markets, investment in Asia-Pacific rose to 29.8 percent of the portfolio from 28.4 percent a year ago, while investment in Africa rose to 1.2 percent from 0.9 percent. North America accounted for 41.9 percent of the portfolio, down from 43.9 percent in 2009.
OVERSEAS EXPANSION
CIC, which made ill-timed investments in Morgan Stanley and Blackstone just before the financial crisis, has benefited from rebounding global markets.
The MSCI world equity index rose 10.4 percent in 2010, and has gained 4.6 percent so far this year.
"Sound performance could help CIC earn trust and win fresh funding from the central government," said Echo Zhu, analyst at fund consultancy Z-Ben Advisors.
"Meanwhile, CIC is increasingly active in its overseas expansion and investment, aiming to grow its own investment expertise."
Underscoring its ambition to become a global player, CIC opened its first overseas subsidiary in Hong Kong last November and opened an office in Canada's Toronto in January.
The fund has also doubled its workforce to nearly 500 from about 250 at the end of 2009, part of efforts to boost its overseas investment capabilities.
Currently, CIC manages 41 percent of its global portfolio directly, with the remainder managed by third-party money managers. - Reuters
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