CIC bets on US, Europe for yields
Source: Xinhua |
April 9, 2013, Tuesday
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Print Edition
Print Edition
EYING returns in the long run, China's sovereign wealth fund will focus more on infrastructure investment in Europe and the United States, the fund's vice chairman and president said yesterday.
The abundant financial firepower of the China Investment Corp, which nears US$500 billion, makes it more suited to infrastructure investment, which requires massive funds but offers slower yields, Gao Xiqing said during the Boao Forum for Asia Annual Conference 2013 held in Hainan Province.
Gao said Europe, where institutional structures hardly make rapid domestic investment possible, offers an ideal option for such investment, as governments there have adjusted taxation and regulatory policies to welcome foreign investment in a bid to help steer economies out of the financial crisis.
"We are optimistic about our investments there," Gao said.
Last year, the CIC bought 8.68 percent in British utility Thames Water for US$1.8 billion, and it acquired 10 percent in the operator of London's Heathrow Airport for US$720 million.
Gao denied some previous reports that the CIC is planning to buy a stake in German auto firm Daimler AG. "Actually, there is no such plan."
Compared with Europe, the infrastructure sector in the US is in more urgent need of investment, Gao noted, adding that the US should learn from the European model of using private capital to finance public projects.
He said the CIC is willing to invest in infrastructure projects in politically stable countries, even though they may deliver fewer returns.
At the same time, Gao said emerging economies in Asia and Africa also present huge opportunities, because despite some short-term instability, their long-term economic prospects are positive.
The CIC, founded in September 2007 with US$200 billion in registered capital from the country's huge foreign reserves, has grown its footprint to over 100 countries, with its overseas portfolio taking up 40 percent of its total assets.
As of the end of 2011, the company's accumulated annualized return since 2007 was 3.8 percent, CIC said.
In 2011, CIC suffered a 4.3-percent loss in its overseas investment portfolios due to slow global economic recovery and the European debt crisis.
The abundant financial firepower of the China Investment Corp, which nears US$500 billion, makes it more suited to infrastructure investment, which requires massive funds but offers slower yields, Gao Xiqing said during the Boao Forum for Asia Annual Conference 2013 held in Hainan Province.
Gao said Europe, where institutional structures hardly make rapid domestic investment possible, offers an ideal option for such investment, as governments there have adjusted taxation and regulatory policies to welcome foreign investment in a bid to help steer economies out of the financial crisis.
"We are optimistic about our investments there," Gao said.
Last year, the CIC bought 8.68 percent in British utility Thames Water for US$1.8 billion, and it acquired 10 percent in the operator of London's Heathrow Airport for US$720 million.
Gao denied some previous reports that the CIC is planning to buy a stake in German auto firm Daimler AG. "Actually, there is no such plan."
Compared with Europe, the infrastructure sector in the US is in more urgent need of investment, Gao noted, adding that the US should learn from the European model of using private capital to finance public projects.
He said the CIC is willing to invest in infrastructure projects in politically stable countries, even though they may deliver fewer returns.
At the same time, Gao said emerging economies in Asia and Africa also present huge opportunities, because despite some short-term instability, their long-term economic prospects are positive.
The CIC, founded in September 2007 with US$200 billion in registered capital from the country's huge foreign reserves, has grown its footprint to over 100 countries, with its overseas portfolio taking up 40 percent of its total assets.
As of the end of 2011, the company's accumulated annualized return since 2007 was 3.8 percent, CIC said.
In 2011, CIC suffered a 4.3-percent loss in its overseas investment portfolios due to slow global economic recovery and the European debt crisis.
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