China's sovereign wealth fund posts 2% rise in net profit

BEIJING (REUTERS) - China's sovereign wealth fund China Investment Corp (CIC) posted a 1.88 per cent rise in net profit for last year, boosted by stronger returns from its overseas portfolio.

Profit rose to US$75.3 billion (S$104.2 billion) from US$73.9 billion a year earlier, its annual report showed on Tuesday (July11). Total investment income was US$83 billion last year, compared with US$76.7 billion in 2015. Its accumulated annualised investment return rose to 4.76 per cent last year.

The increase was bolstered by portfolio adjustment and high returns on stock markets in Europe and the United States, managing director of CIC's financial department Li Wenping said.

The fund is seeking to increase direct investment in the US with its newly established New York office, spokesman Liu Fangyu told Reuters. This includes direct investments in infrastructure and property. Currently, 42 per cent of CIC's total overseas portfolio is in the United States, but mostly in public markets, she said.

CIC, headquartered in Beijing, was founded in 2007 to help China earn a higher return on its foreign exchange reserves. The fund reported a 6.22 per cent return on its overseas investments last year, compared with a negative 2.96 per cent in 2015.

"Eight years following the global financial crisis, major economies' rounds of easing policies and developed countries' sluggish economic recovery led to intensifying competition among global funds, adding pressure on investment returns," CIC vice-chairman and president Tu Guangshao said in the report.

"Potential risks are the rising uncertainties of global politics and policies," he said, referring to the outlook for this year.

A version of this article appeared in the print edition of The Straits Times on July 12, 2017, with the headline 'China's sovereign wealth fund posts 2% rise in net profit'. Print Edition | Subscribe