China sovereign fund makes 11.7pc return in 2010

BEIJING: China's $400 billion sovereign wealth fund said Tuesday it made a return of 11.7 percent on its overseas investments last year as it put more of its focus into emerging markets.

China Investment Corp (CIC) said its total assets hit $409.58 billion by the end of 2010 -- more than doubling from 2007, when CIC was set up, and higher than the $332.39 billion held at the end of 2009.

CIC, which published its annual report on Tuesday, said it had invested nearly half of its $135.1 billion global portfolio in equities by the end of last year.

Fixed-income securities, such as government bonds, accounted for 27 percent of its overseas investments, alternative investments made up 21 percent while just four percent was held in cash, the annual report said.

The investment return of 11.7 percent was the same as in 2009.

"CIC achieved greater geographical and sector balance during 2010," CIC chief executive Lou Jiwei said.

"An increasing percentage of investments has been made in emerging markets" such as Asia, Africa and Latin America.

CIC was set up in 2007 to invest some of China's massive foreign exchange reserves -- the world's largest at $3.1975 trillion at the end of June -- partly to gain better returns.

The reserves are mainly parked in safe but low-yielding instruments such as US Treasury bonds, but since the global crisis CIC has tried to diversify its investments and be more aggressive to improve returns.

CIC was "cautiously positive" about the outlook for this year and would "pursue overseas investment with prudence", Lou said.

Lou was quoted saying in April that CIC was looking for investment opportunities in debt-hit Europe, where the company already has a big exposure, even though he was not very optimistic about the region's prospects.

Copyright AFP (Agence France-Presse), 2011