CIC gets $30b government injection

During the annual National Committee of the Chinese People's Political Consultative Conference (CPPCC), Jianxi Wang (pictured), deputy general manager and chief risk officer of CIC, told local media that the additional capital was provided late last year because the existing corpus had been fully invested.

With financial assets are undervalued and limited investment risk in Europe's  heavily indebted European markets, the region will become CIC's principal target in the short term, Wang told China Daily. "When the economy is good, developed nations prefer to attach some political tag to proposed Chinese investment, but when the economy is ailing, there are less such restrictions," he said.

However, in longer term, CIC will mainly target emerging markets.

Established in 2007, the sovereign fund's initial capital came through the issuance of RMB 1.55 trillion ($246 billion) in special bonds by the Ministry of Finance. These were, in turn, used to acquire approximately $200 billion of China's foreign exchange reserves, which formed the foundation of its registered capital.

The fund started out investing in low-risk assets such as US Treasuries, which still account for the bulk of its assets. At the same time, its appetite for alternative investments has grown in recent years. The fund's exposure to private equity, hedge funds, real estate, energy and infrastructure increased sharply to 21% in 2010 from 6% a year earlier, contributing its asset to grow to $410 billion.

CIC's direct investment strategy has also evolved. The purchase of stakes in financial services companies including Morgan Stanley and The Blackstone Group might have contributed to the fund's professional acumen but they have underperformed financially.

In recent years, there has been a noticeable shift towards energy and infrastructure. Last month, CIC invested in US-based asset management firm EIG Global Energy Partners. In January, it bought an 8.68% stake in UK-based utility Thames Water.

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• Topics
• Greater China
• Investments
• CIC
• China
• Europe
• EIG Global Energy Partners
• Infrastructure
• energy