CIC suffers global investment loss
By Hu Xiaocen |
July 26, 2012, Thursday
|
Print Edition
Print Edition
CHINA Investment Corp reported a loss of 4.3 percent in overseas investment last year, the worst performance since its inception, amid an unstable global economy, the country's sovereign wealth fund said in its annual report released yesterday.
The return on the fund's global investments plunged to a 4.3 percent loss in 2011 from a 11.7 percent gain in 2010, as the complexity of the global investment environment significantly impacted the performance, CIC said in the report.
"The US unemployment rate stayed high, and its credit ratings downgrade sent shockwaves across the world. The spread of the eurozone sovereign debt crisis plunged the region into recession in the fourth quarter of 2011," Luo Jiwei, chairman and chief executive officer, wrote in the report. "We adapted to these changes and decided to extend our investment horizon to 10 years in January 2011 to better reflect our investment approach as a long-term investor."
The fund also increased direct investments and private equity investments in industries such as energy, resources, real estate and infrastructure to bolster the portfolios against market shocks, it said.
"Given the growth in PE investments, which typically endure significant volatility in the first two years after purchase, one- to three-year performance may not look cheerful," Z-Ben Advisors, a market researcher, said in a note yesterday.
In September CIC established an overseas investment affiliate to better manage part of China's mounting foreign exchange reserves and received a capital injection of US$30 billion in December from the State Administration of Foreign Exchange, it said.
China's foreign exchange reserves topped US$3.2 trillion as the end of June, still the world's largest though it shrank amid a slowdown in economic growth.
The annual report showed total assets of the fund rose to US$482.2 billion last year from US$409.6 billion in 2010, while the proportion of cash and cash management products rose from 4 percent to 11 percent.
The return on the fund's global investments plunged to a 4.3 percent loss in 2011 from a 11.7 percent gain in 2010, as the complexity of the global investment environment significantly impacted the performance, CIC said in the report.
"The US unemployment rate stayed high, and its credit ratings downgrade sent shockwaves across the world. The spread of the eurozone sovereign debt crisis plunged the region into recession in the fourth quarter of 2011," Luo Jiwei, chairman and chief executive officer, wrote in the report. "We adapted to these changes and decided to extend our investment horizon to 10 years in January 2011 to better reflect our investment approach as a long-term investor."
The fund also increased direct investments and private equity investments in industries such as energy, resources, real estate and infrastructure to bolster the portfolios against market shocks, it said.
"Given the growth in PE investments, which typically endure significant volatility in the first two years after purchase, one- to three-year performance may not look cheerful," Z-Ben Advisors, a market researcher, said in a note yesterday.
In September CIC established an overseas investment affiliate to better manage part of China's mounting foreign exchange reserves and received a capital injection of US$30 billion in December from the State Administration of Foreign Exchange, it said.
China's foreign exchange reserves topped US$3.2 trillion as the end of June, still the world's largest though it shrank amid a slowdown in economic growth.
The annual report showed total assets of the fund rose to US$482.2 billion last year from US$409.6 billion in 2010, while the proportion of cash and cash management products rose from 4 percent to 11 percent.
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