Return to search

CIC: Overseas investments boost returns despite ‘sluggish’ economies

Despite a sluggish economic recovery and intensifying competition among global funds China’s sovereign wealth fund is looking to continue its overseas expansion in to direct property and infrastructure.

China Investment Corporation, the country's $813 billion sovereign wealth fund, reported a 6.22 percent return on its overseas investments in 2016, compared with a negative 2.96 percent in 2015, despite geopolitical and macroeconomic headwinds.

In its annual report, published Tuesday, Tu Guangshao, CIC's vice-chairman and president said the fund had performed exceptionally well despite sluggish economic recoveries and persistently volatile financial markets.

“Growth in international trade continued to be lackadaisical, trailing the growth of GDP for years. Global foreign direct investments fell far below their peak. These point to the apparent slowing of economic globalization,” Guangshao said.

“The United States, Europe and Japan were plagued by high debt, languishing productivity growth and a serious demographic problem of an aging population. And the expansionary effects of their loose monetary policies were diminishing as trends began to diverge.”

Alternative investments accounted for about 37 percent of its global portfolio, as of the end of 2016. The portfolio generated “satisfactory diversification effect and higher long-term expected returns”, reported CIC.

The fund is seeking to make more direct deals in the US, particularly in infrastructure and property, from its newly established New York office, executives of the CIC said.

In April 2016 underlined its appetite for a greater push into private real estate investment with the creation of a dedicated department and the doubling of its allocation to the asset class.

The department, led by real estate head Zhi Wei Cai, has showcased its real estate push last May with purchase of a 49 percent stake in Manhattan office tower 1 New York Plaza in a deal valued at $700 million. CIC also bagged a 45 percent stake in 1221 Avenue of the Americas from CPPIB for more than a $1 billion in January.

Last month CIC confirmed that it acquired Blackstone’s pan-European logistics platform, Logicor for €12.25 billion.

Headquartered in Beijing, CIC started off with an initial funding of $200 billion in 2007. Its assets exceeded $813.5 billion by end of 2016.