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Ding Xuedong named new China Investment Corp chairman

Updated: 2013-07-07 17:56
By Wei Tian ( China Daily)

The State Council has appointed its deputy secretary-general Ding Xuedong as the new chairman of China Investment Corp, the country's sovereign wealth fund, according to a statement on Friday.

Ding, 53, will be filling the vacancy left by former CIC chairman Lou Jiwei, who was appointed finance minister in March.

CIC's total assets rose to $482 billion in 2011, according to the latest update of the company's annual report.

Ding has both a strong academic background and rich practical experience. He gained a doctorate from the Fiscal Science Research Center at the Ministry of Finance, and was vice-minister of finance before 2010.

He Jun, an analyst with Anbound Consulting, said that, as a sovereign wealth fund, CIC faces political and commercial pressure and is also responsible for preserving and increasing the value of national assets.

The losses in its overseas investment reported in recent years make it a difficult task for Ding, he said. Founded in 2007, the Beijing-based CIC achieved an accumulated return rate of 3.8 percent by the end of 2011. The fund reported losses of 4.3 percent in 2011, while its net profits declined 6 percent. CIC achieved a 10.6 percent investment return on its overseas portfolio last year, Liang Xiang, vice-president of CIC, was quoted as saying in March.

Under Lou, CIC boosted its holdings in resource-related companies and bolstered its long-term portfolio and private-equity assets.

Financial sectors were CIC's largest investment destination, accounting for nearly 20 percent of its total portfolio. Energy and IT were the second and third-largest areas for CIC’s investment.

North America accounted for 44 percent of CIC's diversified equity investments as of 2011, followed by 30 percent in Asia and 20 percent in Europe, according to its latest annual report.

The fund held 62 percent of its fixed-income portfolio in government bonds. But Ding faces the prospect of rising interest rates after Federal Reserve Chairman Ben Bernanke said bond purchases that have buoyed assets worldwide may be halted in 2014 if the world's largest economy performs in line with the central bank's projections.

"It will be difficult to meet return expectations in light of recent market volatility," Sven Behrendt, managing director at Geneva-based political risk research and advisory firm GeoEconomica, which does research on sovereign wealth funds, was quoted by Bloomberg as saying.

"Those return expectations will be high, given CIC's bumpy performance over the past years."

Bloomberg contributed to this story