By Chrysant Liu
China Investment Corp (CIC), the US$300 billion sovereign wealth fund, has established its first overseas office in Hong Kong as it moves to expand its in-house operations and take more direct control over its investments, Business China reported.
The new subsidiary, CIC International (Hong Kong) Co, has been in the Citic Tower, Central, Hong Kong and has appointed Lawrence Lao, a professor of economics, a former cast member of the International Advisory Committee as its chairman. CIC has been actively recruiting dozens of new fund managers, investment specialists and support staff in recent months, as it ramps up its ability to invest in a broad range of asset classes globally.
The move to Hong Kong underscores the funds ambition to secure its status as a global investment group and not just Chinas sovereign wealth fund.
At present, domestic financial sector holdings still make up the bulk of CICs portfolio, likely accounting for around US$200 billion of the CICs reported US$300 billion in assets under management at the end of 2008.
It stepped up its investment activities with about US$58 billion in 2009. According to its annual report in 2009, CICs global investment portfolio includes 36% in equities, 32% cash fund, 26% fixed income securities and 6% alternative investment. The return on its global portfolio in 2009 was 11.7% compared to -2.1% in 2008.
With its own offices and a new offshore legal entity in Hong Kong, CIC is now positioning itself to make more of these investments itself.
By setting up in Hong Kong, CIC is following in the footsteps of Chinas State Administration of Foreign Exchange (SAFE), which is in charge of investing the bulk of the countrys foreign exchange reserves in more conservative and stable assets such as US Treasury bonds.
SAFE already has offices in Hong Kong, Singapore, London and New York.
