CIC reports $51.5b net profit in 2010
Updated: 2011-07-27 08:15
By Wei Tian and Liu Baijia (China Daily)
BEIJING - China Investment Corp (CIC) added $35.7 billion in new investment in 2010, which reduced the cash balance in the sovereign wealth fund's (SWF) overall portfolio from 32 percent to 4 percent, according to its 2010 annual report released on Tuesday.
CIC reported a net profit of $51.5 billion in 2010, with a net asset value of $374 billion. The annual return rate of its global portfolio reached 11.7 percent, and the accumulated annual return rate since establishment stands at 6.4 percent.
By comparison, Temasek Holdings Pte, Singapore's SWF, reported a 4.6 percent return rate in 2010.
With a more diversified portfolio strategy that focused on long-term investment, CIC increased its investment in private equity, property and infrastructure, while attaching more importance to investing in emerging economies. The number of investments in its portfolio doubled in 2010.
North America is still the largest destination for CIC's investment, accounting for 41.9 percent of the fund's portfolio, followed by the Asia Pacific region at 29.8 percent and Europe at 21.7 percent.
In terms of industries, CIC has a significant part of its overall investments in finance (17 percent), energy (13 percent), and materials (12 percent). In January, the CIC board decided to extend the assessment cycle from five to 10 years, and take the 10-year-yield as the key index for evaluating the fund's performance.
Wang Shuilin, CIC's spokesman, said the change was to emphasize the fund's position as a long-term investor and to improve its resistance to market fluctuations.
Established in 2007, CIC is one of the world's largest SWFs and is responsible for managing part of China's $3 trillion foreign exchange reserves.
The fund received approximately $200 billion of assets under management when established in 2007.
Li Keping, former vice-chairman of China's national pension fund, was recently appointed as CIC's executive director and chief investment officer. Li replaces Gao Xiqing, who remains as president.
Wang Jianxi, vice-president of the fund, revealed in May that the capital injection plan had been approved by the central government, and that the central bank and the Ministry of Finance were working towards a consensus on how the plan will be carried out.
China's foreign exchange reserves hit a record $3.19 trillion by the end of June. More experts are calling for investors such as CIC to turn part of the reserve into investment, but like all investors, the fund faces its risks.
Fan Jianjun, an economist with the State Council Development Research Center, said SWFs have their own drawbacks, and most do not have a decent return rate.
(China Daily 07/27/2011 page13)