China Investment Corporation (CIC), the country's sovereign wealth fund, said Friday in its annual report that the rate of return on its global portfolio for 2008 was negative 2.1 percent, while the overall return on registered capital was 6.8 percent.
The CIC slowed investment pace from July 2008 in the face of the global economic downturn. As the overall economy improves, CIC would become more active investing overseas, said a senior official.
He said the fund would stick to prudent and secure investment principles in 2009 as before. The CIC had now begun to open new positions in the global market after reducing investment to minimize the downturn's impact.
Aiming at long-term investment returns, the CIC will strategically adjust its investment according to specific economic situations. Each decision on investment would be made considering relevant conditions as the global picture did not always reflect the true situation in certain countries or economic sectors, he said.
Although the return on the global portfolio in 2008 was negative 2.1 percent, CIC outperformed other sovereign wealth funds, university endowments and pension funds, the report said.
According to the report, the CIC invested cautiously in 2008, ending the year with about 87.4 percent of its assets in cash and cash products.
With sufficient capital on hand for investment, the CIC is well positioned for the remainder of 2009, the report said.
Despite the negative portfolio return, the CIC attained a return on its registered capital of 6.8 percent as Central Huijin, a wholly owned subsidiary of the CIC, experienced substantial growth in the value of its investments in China's financial institutions, said Lou Jiwei, Chairman and CEO of CIC, in the report.
CIC comprises two distinct parts: an investment management operation which makes non-RMB global investments, and China Huijin Investment Ltd., which invests exclusively in domestic state-owned financial institutions on behalf of the central government to improve governance and preserve and enhance the value of state-owned financial assets.
The CIC has 200 billion U.S. dollars in registered capital, of which, slightly more than 50 percent was used for global investment and the balance for investment in domestic financial institutions by Central Huijin, the report said.
Global investment activities of the CIC and domestic investment activities of Central Huijin are completely separate.
The CIC reaffirmed its investment goal of long-term, sustainable, risk-adjusted returns for its shareholders. As a financial investor, it would not seek to control enterprises or sectors. It invests on a commercial basis.
The CIC was launched in September 2007 to mitigate risks in China's huge foreign exchange reserves. The Ministry of Finance issued 1.55 trillion yuan (208 billion U.S. dollars) worth of special treasury bonds to buy forex reserves and inject the funds into the CIC.
(Xinhua News Agency August 7, 2009)