(Recasts, adds details)
By Koh Gui Qing
BEIJING Aug 8 China's $653 billion sovereign
wealth fund, China Investment Corp. (CIC), posted on
Friday a 12 percent jump in net profits for 2013, but warned
that its performance is being pressured by global economic
Created to earn higher returns for China's $4 trillion
foreign exchange reserves, CIC said it liked the farming,
property, infrastructure and high-tech sectors, but that it was
getting harder to pick investments in an unpredictable
A bigger bet on global stock markets and government bonds in
emerging countries - at the expense of sovereign bonds in
developed economies - helped CIC earn a 9.3 percent return on
its overseas investments in 2013, down slightly from 10.6
percent in 2012.
"In this year's environment, the pressures that we face in
investment and returns are quite large," said Liu Fangyu, CIC's
spokeswoman, declining to elaborate on any investment made by
CIC in the past year.
On a cumulative and annualised basis, CIC's returns on its
overseas investments - which are worth about $200 billion in
total, according to Liu - rose to 5.7 percent last year. That is
its second-best performance since the fund's inception in 2007,
and up from a 5 percent return in 2012.
CIC, whose previous high-profile investments included taking
a 10 percent stake in Britain's Heathrow Airport Holdings in
2012 for 450 million pounds ($756.5 million), has not announced
any deals of note in the past year as it underwent a leadership
Chairman Ding Xuedong was appointed in July last year after
his predecessor, Lou Jiwei, was made finance minister. Vice
Chairman Li Keping was appointed in February after the
incumbent, Gao Xiqing, retired.
Besides its foreign holdings, CIC has domestic investments,
including ownership of swathes of China's banking sector held
through its unit Central Huijin.
MORE EMERGING MARKET SOVEREIGN BONDS
For 2013, CIC said its net profits reached $86.9 billion
compared with $77.7 billion the year before. It previously put
its 2012 net profit at $77.4 billion, and did not explain the
discrepancy at a briefing to unveil the figures in an annual
Between asset classes, global stock market investments
accounted for 40 percent of CIC's overseas portfolio last year,
up from 32 percent in 2012, the annual report showed.
Financial stocks were CIC's top pick, taking up 23 percent
of its equity investment, followed by consumer shares at 12.5
percent, and information technology counters at 12 percent.
The fund's exposure to "long-term investments", which
include investments in private equity, commodities,
infrastructure and real estate, was pared to 28 percent from 32
percent in 2012.
The fund held less cash relative to other investments last
year, and fixed income also accounted for a smaller slice of
total foreign assets at 17 percent, compared with 19 percent in
The U.S. stock market took up the bulk of CIC's investment
in foreign equities at 46 percent, while bourses in other
developed countries held 37 percent of the fund's share
investment. Emerging stock markets had the lowest weighting at
A breakdown of CIC's fixed income investment showed it moved
its cash from developed countries to emerging markets.
Sovereign bonds in advanced economies took up 44 percent of
total fixed income investment, down from 55 percent in 2012, the
annual report showed. Exposure to emerging markets in the
meantime rose to 27 percent from 17.5 percent.
(Editing by Simon Cameron-Moore and Robert Birsel)