China sovereign wealth fund CIC boasts 10.6% return in 2012

BEIJING (AFP) - Sovereign wealth fund China Investment Corporation (CIC) boasted a 10.6 per cent return on its global investment portfolio last year, according to the company's annual report.

The rise is in marked contrast to the previous year, when the fund suffered a 4.3 per cent loss, the lowest return since it was launched in 2007. By the end of last year, the company's total assets stood at US$575.2 billion (S$722.9 billion), compared to US$482.2 billion by the close of 2011, the report which was put online Saturday stated. The figure brings the company's accumulative annualised rate of return since its establishment to 5 per cent.

The fund was set up six years ago with US$200 billion to make better use of China's colossal foreign exchange reserves which now amount to US$3.4 trillion. After initially posting 11.7 per cent rises in 2009 and 2010, the fund fared poorly in 2011, hit by difficulties in the global economy and the worsening euro zone debt crisis.

In a statement released with the annual report, Mr Ding Xuedong, CEO and chairman of CIC, said intense market research and effective risk management helped the fund see a good return by the end of the year.

"In 2012, global financial markets remained in thrall to continued high risks, low yields and high volatility, hallmarks of the post-crisis era," he said. "Thanks to intensified market research and timely adjustment to optimise our portfolio mix, we promptly seized the window of opportunity on the back of a market turnaround in the second half of the year."

Former chairman and CEO Lou Jiwei said the young fund had "come a long way" in difficult global circumstances.

"As China's young sovereign wealth fund, we set sail in turbulent times and navigated uncharted waters with courage and competence," he said in a statement released with the annual report.

CIC has increasingly invested in stock markets. By the end of last year, shares in listed companies accounted for 32 per cent of its overseas portfolio compared to 25 per cent the year before.

Company spokesman Liu Fangyu told Xinhua news agency the company also secured a state cash injection of US$19 billion last year in addition to US$30 billion added in 2011.

Other sectors the fund have recently invested in included buying up a 10 per cent stake in Britain's Heathrow Airport and 5.3 per cent of the Moscow stock exchange.