China sovereign fund CIC posts first loss on overseas investments in 4 yrs (updated)

Major Holdings

22/07/2016 12:39

* Assets up 9 pct to $814 bln, net income down 17 pct to 
$73.9 bln 
    * Net return on overseas investments is -2.96 pct, a 4-yr 
low 
    * Says 2016 expected to be another year of sluggish growth 
 
 (Recasts, adds comments from annual report) 
    By Xiaochong Zhang and Nicholas Heath 
    BEIJING, July 22 (Reuters) - China's $814 billion sovereign 
wealth fund China Investment Corp (CIC)  CIC.UL  gave a bleak 
outlook after reporting its first loss on overseas investments 
in four years, battered by a fall in commodity prices and weak 
currencies. 
    While total assets at CIC, among the world's largest 
sovereign wealth funds, climbed 9 percent last year to $813.8 
billion, net return on overseas investments fell to a negative 
2.96 percent from a positive 5.47 percent in 2014.  
    "Given uncertainties like the Fed's fickleness on raising 
rates, Brexit and fluctuations of major currencies, 2016 is 
likely to be another year of sluggish growth, coupled with 
subdued inflation, low productivity, and lackluster trade,"      
Ding Xuedong, CIC's chairman and CEO, said in its annual report 
published on Friday. 
    CIC ranks among the world's top five state investors 
alongside Abu Dhabi Investment Authority and Norway's sovereign 
wealth fund. 
    Singapore state investor Temasek  TEM.UL  earlier in July 
announced its portfolio value fell 9 percent to S$242 billion  
($178.44 billion) in the year ended March 2016.  urn:newsml:reuters.com:*:nL4N19T2AR 
    CIC's net income fell 17 percent last year to $73.9 billion. 
It also reported a record foreign exchange loss of $3.77 
billion. The 2015 return on overseas investments was the lowest 
since it returned a negative 4.3 percent in 2011.  
    At its annual briefing, CIC spokeswoman Liu Fangyu told 
reporters the faltering performance was mainly due to falling 
commodity prices, low investment returns on stocks and bonds in 
a low interest rate environment, and major foreign exchange 
losses. 
    About 47 percent of CIC's global portfolio was invested in 
stocks in 2015, about 14 percent in fixed income, nearly 13 
percent in absolute return, and about 22 percent in long-term 
investments, it said. Only about 3 percent was held in cash. 
    CIC invests overseas through two subsidiaries, CIC 
International Co and newly-launched direct investment vehicle 
CIC Capital Corp. 
    It is a major shareholder in China's biggest banks such as 
Industrial and Commercial Bank of China Ltd  601398.SS , China 
Construction Bank Ltd  601939.SS  and Agricultural Bank of China 
Ltd  601288.SS  via its Central Huijin Investment Ltd 
subsidiary. 
    The Chinese fund ramped up its investment in real estate and 
infrastructure last year. It has so far made more than 40 
property investments in North America, Europe, Asia and Oceania. 
    CIC was founded in 2007 as a wholly state-owned company to 
help China earn a higher return on its pile up of foreign 
exchange reserves, which stood at $3.2 trillion in 
June. urn:newsml:reuters.com:*:nL4N19T2TD 
($1 = 1.3562 Singapore dollars) 
 
 (Reporting By Zhang Xiaochong, Nicholas Heath and Shu Zhang, 
Writing by Shu Zhang and Anshuman Daga; Editing by Muralikumar 
Anantharaman) 
 ((shu.zhang@tr.com; +86 10 6627 1271; Reuters Messaging: 
shu.zhang@tr.com)) 
 
Keywords: CHINA CIC/RESULTS