CIC Chairman Seeks Emerging Markets

(April 22, 2011) — China Investment Corporation (CIC) is targeting emerging economies to expand its overseas investment in developing economies, the China Daily reported, citing the fund’s chairman, Lou Jiwei.

Jiwei told the China Daily that the company’s board of directors plans to raise more funds to pursue expansion overseas, with a particular focus on investment in developing markets. “CIC needs to diversify asset allocation, and employ different methods to invest in different areas, in order to reduce potential risks and achieve maximum returns,” Lou told the publication.

In 2010, the nation’s $300 billion sovereign wealth fund upped the number of investments in developing economies, including Brazil and Indonesia, whose returns surpassed that earned in developed economies, according to the China Daily. Last year, the fund’s rate of return was almost the same as the 11.7% return posted in 2009, the newspaper also cited him as saying.

In the face of heightened risk as a result of current unrest in Libya and elsewhere, Yao indicated that the Chinese government and companies planning to invest oversees must sign bilateral agreements to secure investments, increasing cooperation with the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group that provides insurance for overseas investments.

In addition to aims to broaden exposure to emerging economies, the CIC has revealed that it is seeking investment opportunities in Europe, with caution. While default in the Eurozone is threatening institutional investors and asset managers, Jiwei has expressed his cautious position on continued investment in the European region, which accounted for 20.5% of the fund’s diversified equity investments at the end of 2009, according to its latest financial reports.

“From the investment perspective, (we’re) not very optimistic about Europe,” Lou said at the Boao Forum for Asia, the Wall Street Journal reported. “But it doesn’t mean we wouldn’t like to invest (in Europe),” he said. Lou acknowledged the stalled economic growth of European countries as a result of the eurozone sovereign debt crisis, yet he indicated that there are still opportunities in Europe with regards to investing in infrastructure.