CIC returns to profit in 2012 on back of equities boost

CIC doubled its exposure to private equity, direct investments and hedge funds in 2011 but market volatility saw its global portfolio retract by 4.3%, contributing to its first-ever annual loss.

Net profit rose 60% to $77.4 billion last year, CIC said in its annual report released on Friday.

"Thanks to intensified market research and timely adjustment to optimize our portfolio mix, we promptly seized the window of opportunity on the back of a market turnaround in the second half of the year," said Ding Xuedong, who succeeded Lou Jiwei as chairman of CIC earlier this month.

However, he warned that "the subdued global economic recovery, compounded by rising protectionism, will cast a prolonged shadow over the outlooks of global financial markets." Global financial markets are also likely to become more volatile as major developed economies start to taper their quantitative easing programs.

CIC had $575.2 bbillion in assets under management at the end of 2012, up from $482.2 billion previous year.

Public equities as a whole made up 32% of its global investment portfolio, up from 25% in 2011. Long-term investments - including direct investments in non-public companies and private equity, real estate, mining, and infrastructure - accounted for 32.4%, up from 31% a year ago.

Cash holdings fell from 11% to 3.8% while fixed income and absolute returns came in at 19.1% and 12.7%, respectively.

Most of CIC's equity allocations are in the US, which accounts for 49.2%, while emerging markets make up 23%.

CIC made several high-profile direct investments last year, including paying GBP450 million ($725 million) for a 10% stake in Heathrow Airport Holdings. "CIC sees the UK as a destination of choice for long term investment because its business-friendly environment and sound legal framework," it said in the report.

CIC was set up in 2007 with RMB1.55 trillion ($246 billion) in special bonds issued by the Ministry of Finance, which were used to acquire approximately $200 billion of China's foreign exchange reserves.

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• Topics
• Greater China
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• Performance
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