CIC reports losses in overseas investments

China's sovereign wealth fund China Investment Corporation reported losses of 4.3 percent in its global investment portfolio last year, the company's 2011 annual report showed on July 25.

In 2010, CIC had an annual return of 11.7 percent. The cumulative annualized return for CIC stands at 3.8 percent since it was established in 2007.

The report attributed the decline in revenue to the value fluctuations of its investments in financial, resources and energy assets amid the global economic turmoil.

CIC reduced its investments in Europe by 1.1 percentage points to 20.6 percent at the end of 2011, while its assets in North America increased 1.9 percentage points to 43.8 percent.

By the end of 2011, CIC's total assets value, including Central Huijin Investment, was $482 billion, 11.7 percent up from $410 billion in the previous year. The company reported a net profit of $48.4 billion, down 6 percent year on year.

Meanwhile, CIC's board of directors said it has decided to extend its investment horizon to 10 years to better reflect its role as a long-term investor. The company made adjustments to its asset allocation accordingly.

A spokesman said that the fund's long-term assets now account for more than half of its investment portfolio. The company is increasing its investments in commodities, resources and energy.

In 2011, CIC adjusted its organizational structure by establishing CIC International Co Ltd, which specializes in the management of overseas investments.

In Dec 2011, $30 billion was injected into CIC International in a bid to enhance its role as a vehicle to diversify China's foreign exchange holdings.

At the end of June, CIC had 405 members in its overseas investment team, up from 342 a year ago.

Lou Jiwei, chairman and CEO of CIC, said the recovery of the global economy remains fragile, and fresh volatilities in global financial markets still pose risks. "CIC will adhere to its prudent investment approaches to achieve good financial returns within acceptable risk tolerance over the long term," Lou said.