China sovereign wealth fund expands by $125 billion

CIC was created in 2007 with US$200 billion to make better use of China's colossal foreign exchange reserves, which amounted to US$3.73 trillion this March.
CIC was created in 2007 with US$200 billion to make better use of China's colossal foreign exchange reserves, which amounted to US$3.73 trillion this March. PHOTO: REUTERS

BEIJING (AFP) - Sovereign wealth fund China Investment Corp (CIC) saw its total assets soar by US$93 billion (S$125 billion) to nearly US$750 billion last year, it said Friday, although subdued global growth slowed returns on its overseas portfolio.

CIC was created in 2007 with US$200 billion to make better use of China's colossal foreign exchange reserves, which amounted to US$3.73 trillion this March.

Its total assets expanded to US$746.73 billion by the end of 2014, an increase of US$93.5 billion, CIC said in its annual report.

But returns on the overseas portfolio dropped to 5.47 per cent, down from 9.33 per cent in 2013 and the weakest since 2011, according to the document.

"During 2014, the global economy recovered at a slower speed than expected," Ding Xuedong, chairman and chief executive officer of CIC, said in the report. "CIC... remained focused on identifying the investment opportunities that China's economic success, economic structural upgrading, and global outreach present," he added.

The document did not specify the size of CIC's foreign investment portfolio, but said 44 per cent of it was in publicly-quoted shares, with almost half of that - 45.6 per cent - in US equities.

Fixed income products accounted for 14.6 per cent of the portfolio, with advanced economies' sovereign bonds accounting for 57.4 per cent of that, it added.

One CIC subsidiary, Central Huijin, is a vehicle through which China holds stakes in key state-owned financial institutions.

It owns 65.5 per cent of Bank of China, the document showed, 57.3 per cent of China Construction Bank, 40.3 per cent of Agricultural Bank of China, and 35.1 per cent of Industrial and Commercial Bank of China, the world's biggest lender.

In 2012, CIC acquired 8.68 per cent of British utility company Thames Water - the largest water and sewage service provider in Britain - for an unspecified price.

Later in the year, it bought a 10 per cent stake in London's Heathrow Airport for £450 million (now S$950 million).

In 2009, the company took over 15 percent of Virginia-based power company AES Corp for US$1.58 billion.