China Investment Corp gets injection of capital

Updated: 2012-02-14 09:23

(China Daily)

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BEIJING - China Investment Corp, the nation's sovereign wealth fund, has received a capital injection after it invested almost all of its cash in 2010, said Lou Jiwei, CIC chairman.

China Investment Corp gets injection of capital


In an interview at a Beijing forum on Monday, Lou declined to disclose the amount of the infusion. He said a Caixin Online report that said CIC received $50 billion was "inaccurate".

Almost all of the money in the fund was spent in 2010 as an improving world economy prompted a 10-percent gain in the MSCI World Index, which tracks more than 1,600 stocks, and CIC has been seeking capital from the government for a year.

The country's foreign-exchange reserves, managed by the central bank through the State Administration of Foreign Exchange, dropped for the first time in more than a decade in the fourth quarter.

China's reserves, the largest in the world, fell from $3.2 trillion on Sept 30 to $3.18 trillion on Dec 31 as foreign investment moderated, the trade surplus narrowed and Europe's debt troubles spurred sales of emerging-market assets in the quarter.

CIC received the new capital from the nation's central bank after the Chinese Lunar New Year holiday, which ended late last month, according to a Feb 10 Caixin report citing an unidentified source. The People's Bank of China will become a new shareholder in the fund, the report said.

According to Lou, European government bonds are not the best purchases for long-term investors such as CIC.

Instead, CIC will look to put money into infrastructure and real industrial projects, Lou added.

"For instance, the European bonds - like the government bonds of Italy and Spain - only central banks with certain responsibilities can invest, you know, for commercial investments, it's very difficult to make such investments for long-term investors like us," Lou said.

"Investment chances may lie in areas like infrastructure and industrial projects, and these projects can help economic recovery."

CIC recently bought a minority stake in the London water supplier Thames Water Utilities Ltd, an early sign that the attempts to drum up foreign investment in Britain's ailing economy may be paying dividends.

CIC was established in 2007 using $200 billion of capital from the Ministry of Finance, which borrowed reserves from the central bank through a bond sale. The fund posted an 11.7-percent return on its overseas investments in 2010, it said in its 2010 annual report.

Its cash and cash equivalents fell by 28 percentage points in 2010 to 4 percent of the fund's global portfolio, CIC said in its 2010 annual report.

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