CIC Notes 'Fairly Good' Returns Last Year; Seeks More Capital

(January 18, 2011) — In a rare public statement, the China Investment Corp (CIC), the nation’s $300 billion sovereign wealth fund, posted “fairly good” returns in 2010 and has requested more capital after deploying all its current funds.

According to Bloomberg, the sovereign wealth fund, which posted an 11.7% return on its overseas portfolio in 2009 after raising bets on commodities, will seek additional money from the government with hopes that the CIC will increase investments. “We hope to get more funding,” Executive Vice President Jesse Wang told a forum in Beijing, as reported by the news service, adding that the fund is now waiting for the government’s decision to provide more funding. The CIC received a $200 billion injection with central government funds in 2007 and it has awaited a second $200 billion injection for more than a year. With its strong investment record, the CIC has argued it deserves additional funds. At the end of 2009, the CIC reported total assets of $332 billion, realizing a 12.9% return that year compared with a 6.8% return in 2008.

Wang told Bloomberg that China should consider investing its foreign-exchange reserves in energy, resources, high technology and agriculture. Regarding the nation’s plan to diversify its investment portfolio that includes $906.8 billion in US Treasuries, Wang defended the logic behind dollar-denominated investments. “Actually, it is unnecessary to complain too much about risks in the dollar and US Treasurys,” Wang said, according to the Wall Street Journal. “Moving the investment into other sectors doesn’t necessarily reduce risks,” he Wang said, noting the high liquidity of US Treasurys.