CIC’s overseas investments return 10.6% in 2012
29 July 2013
News, China, Global
By Asia Asset Management
Chinese sovereign wealth fund China Investment Corporation (CIC) posted an annualised return of 10.6% on its overseas investments last year, for a cumulative annualised return of 5.02% since its inception in 2007. The fund pins the returns on intensified market research and timely adjustments to its portfolio mix.
The gain represents a significant improvement on 2011, when CIC succumbed to an annualised loss of 4.1% on its overseas investments.
In 2012, the fund’s total assets grew 19.2% year-on-year to US$575 billion from US$482 billion from the previous year.
Ding Xuedong, chairman and CEO of CIC, said in its latest annual report that the fund’s board of directors reviewed and approved the 2012-2016 strategic plan of development early last year, outlining the strategy to grow CIC’s investment overseas.
“As a long-term investor, we invest in assets such as infrastructure, energy, mining, and private equity. We also redoubled the efforts to strengthen post-investment management and optimise the portfolio structure in a bid to improve our in-house investment capacity.”
“In 2012, CIC International (Hong Kong) set up an investment review mechanism and a risk control system as part of an ongoing effort to ensure smooth operation. CIC Representative Office in Toronto maintained close and effective communication with stakeholders in the region and helped CIC expand its local presence as well,” he added.
CIC allocated 32.4% of its AUM to long-term investments, while 32% and 19% of were placed in public equities and fixed income securities, respectively.
The fund secured several major direct investment transactions in 2012. For example, it bought a 10% stake in Heathrow Airport Holdings in November 2012 for £450 million (US$688.5 million). It also purchased a 4.58% stake in Moscow Exchange for US$187 million in December last year.
Around 36.2% of CIC assets were managed in house, with the remaining 63.8% outsourced to external managers.
Mr. Ding remarks: “Going forward, the subdued global economic recovery, compounded by rising protectionism, will cast a prolonged shadow over the outlooks of global financial markets. And as major developed economies embark on tapering their quantitative easing programs, volatility of global financial markets will be further increased, creating new challenges for institutional investors.”
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