Sovereign fund CIC's overseas investments swing into the black

China Investment Corp. [Photo by Wu ChangQing/For China Daily]

China's sovereign wealth fund China Investment Corp on Tuesday posted a 6.22 percent return on its overseas investments last year, reversing a loss in the previous year.

The investment gain, compared with the negative 2.96 percent return in 2015, was boosted by a rally in the stock markets in the US and Europe, as well as active adjustment of CIC's investment portfolio, Li Wenping, managing director of CIC's department of finance, told reporters at a news conference.

The $813.5 billion sovereign wealth fund reported a total net profit of $75.3 billion last year, up from $73.9 billion in the previous year, according to its 2016 annual report released on Tuesday.

CIC is seeking to increase investments in international infrastructure projects, long-term assets such as property and private equity, and to tap into the opportunities generated by the Belt and Road Initiative, said CIC spokeswoman Liu Fangyu.

The fund is also looking at boosting its direct investments, including infrastructure and property projects in the US.

The US remained the biggest investment destination for the Chinese fund with investment values exceeding $90 billion, accounting for about 42 percent of its total overseas investment last year, according to Liu. The fund set up its New York office in 2015 to explore investment opportunities there.

"Our investment portfolio in the US is very unbalanced compared with our global portfolio as it is mostly invested in the US public markets," Liu said.

"We are upbeat about the China-US economic relations and hope the US government can create a more open and fair environment for foreign institutional investors like CIC," she added.

To diversify its global investment portfolio, CIC established a subsidiary in 2015 to carry out direct investments in overseas markets. In 2016, the fund signed 16 direct investment deals worth about $5 billion.

The sovereign wealth fund has also been active in the current year. Last month CIC agreed to buy European logistics property firm Logicor for $13.95 billion from Blackstone Group LP.

Commenting on the investment outlook for 2017, CIC President Tu Guangshao said in the report that potential risks were policy changes in foreign countries and increasing uncertainty in global politics.

Numerous rounds of policy easing by the major economies have led to greater capital competition, which will add pressure on investment returns, Tu said.

By the end of 2016, the fund allocated about 46 percent of its assets in public equities markets, 15 percent in fixed-income products, and the rest in other assets－such as hedge funds and private equities and cash products－according to its annual report.