BEIJING, July 26 China's $500 billion sovereign
wealth fund, China Investment Corp (CIC), returned to
profit growth in 2012, citing growing traction in the global
recovery at the end of the year and a steady improvement in risk
CIC was created in 2007 to earn higher returns from riskier
investments such as commodities, private equity and hedge funds
for part of China's $3.4 trillion foreign exchange reserves. In
2011, the fund reported its first-ever decline in profit due to
market weakness amid Europe's debt crisis.
In the third quarter of last year, the Federal Reserve's QE
and the European Central Bank's Outright Monetary Transactions
programmes helped boost the global recovery and lift asset
prices, CIC Chairman Ding Xuedong said in the fund's annual
report released on Friday.
"We promptly seized the window of opportunity on the back of
a market turnaround in the second half of the year," said Ding,
who became chairman earlier this month.
In the report, CIC said net profit rose 60 percent to $77.4
billion last year.
Its return on overseas investments was 10.6 percent in 2012,
compared to a negative 4.3 percent in 2011, it said in the
report released on its website, www.china-inv.cn.
Its cumulative annualised return in 2012 was 5.02 percent,
compared with 3.8 percent the previous year.
"CIC continued to build up its long-term asset portfolio and
weighted it toward infrastructure, agriculture and other
projects that generated steady returns, thus providing stable
cash returns while improving the risk return profile," the
The fund made several high-profile long-term investments in
2012, including paying 450 million pounds ($689 million) for 10
percent of the UK's Heathrow Airport Holdings and $300 million
for 9.9 percent of U.S. firm EP-Energy.
The report showed that as of December last year, 49.2
percent of its equity investment was in U.S. stocks, 27.8
percent in advanced economies outside the U.S. and the rest in
emerging markets shares.
Equities as a whole made up 32 percent of its investment
portfolio, with long-term investments 32.4 percent and fixed
income investments 19.1 percent. Over half of the fixed income
investment was in sovereign bonds of advanced economies.