CIC reports 11.7 pct global return in 2009

China Investment Corporation (CIC), the country's sovereign wealth fund, said Thursday in its newly released annual report that the rate of return on its global portfolio for 2009 was 11.7 percent, compared to a negative 2.1 percent in 2008.

This is CIC's second annual report. The overall return on registered capital of the Chinese wealth fund reached 12.9 percent in 2009, after combining with the return of the China Huijin Investment Ltd., CIC's wholly-owned subsidiary which invests exclusively in China's domestic financial institutions.

The company has quickened its pace of overseas investments since the start of May last year. It invested 58 billion U.S. dollars globally after a slowdown in 2008 of 4.8 billion U.S. dollars.

"The good return shows that our judgement of the market at the beginning of 2009 was quite correct when a pessimistic mood still hovered over it," said Jin Liqun, chairman of the Board of Supervisors.

CIC has 200 billion U.S. dollars in registered capital, of which slightly more than 50 percent was used for global investment.

Combining the investment volume of 21 billion U.S. dollars by the end of 2008, CIC has invested a total of 79 billion U.S. dollars globally since its founding in 2007.

"CIC's global investment rose fast in the first half of the year. The cash balance is rather low so far," said Zhou Guomin, financial director of CIC.

"We will press ahead with the current investment strategy," said Jin.

CIC reported a net profit of 41.66 billion U.S. dollars in 2009, nearly double the 23.13-billion-U.S.-dollar profit it made in 2008.

According to the annual report, by the end of 2009, the CIC global investment portfolio comprised: 36 percent of equities, 32 percent of cash funds, 26 percent of fixed income securities and six percent of alternative investments.

CIC significantly diversified its portfolio with an emphasis on publicly-traded equities and debt securities in global markets as well as making a series of direct investments in high-quality companies, including investments in infrastructure and clean and renewable energy projects, said Lou Jiwei, chairman and CEO of the CIC.

Looking back, CIC invested 1.5 billion U.S. dollars in the Canadian mineral company Teck Resources Ltd., 1.9 billion U.S. dollars in the Indonesian thermal coal production company PT Bumi Resources Tbk, 1.58 billion U.S. dollars in the U.S. power generation company AES corporation and other companies covering sectors such as oil and gas, renewable energy and grain.

As its overseas investment expanded, CIC further heightened its risk control system in 2009 to ensure risk exposure of the portfolio was managed effectively and appropriately.

"The objective of CIC's global investment is to achieve an appropriate long-term and risk-adjusted return for its shareholders," said Jin, who emphasized that CIC's investment was only for commercial purposes.

As for an institutional investor, a long-term stable annual return of eight to ten percent is quite good, he said.

CIC comprises of two separate parts: an investment management operation which makes non-RMB global investments, and China Huijin Investment Ltd., which invests exclusively in domestic state-owned financial institutions on behalf of the central government to improve governance and preserve and enhance the value of state-owned financial assets.

The CIC was founded in September 2007 to mitigate risks in China's huge foreign exchange reserves. The Ministry of Finance issued 1.55 trillion yuan (208 billion U.S. dollars) worth of special treasury bonds to buy forex reserves and inject the funds into the CIC.

Source: Xinhua