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China’s sovereign wealth fund experiences ‘worst year ever’

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Despite the size of their economy and the amount of direct state support, China was far from immune to the global depressions occurring in Europe and the US. In 2011 Chinese investments took a massive hit but in spite of the loss, they feel confident in their long-term positions. CNN reports on the current status of one of the world’s largest sovereign wealth funds:

China’s sovereign wealth fund suffered its worst year ever in 2011, losing 4.3 per cent on its global investment portfolio.

In an annual report that has become the focal point of its efforts to portray itself as a transparent institution, China Investment Corp also confirmed that it had received a $30bn capital injection from the government at the end of last year, boosting its investment firepower.

“As a long-term investor, we are well positioned to withstand short-term volatility in markets, to pursue contrarian investments and to build long-term positions that can capture the premium for less liquidity,” it said.

It blamed its weaker performance in 2011 on a weak market and the fact that many of its private equity holdings are still at their investment stage.

“In 2011, we built up our long-term asset portfolio and weighted it toward long-term assets. We steadily built positions in private equity investments across various industries, especially those in emerging markets,” it said.

CIC managed $482bn in assets at the end of last year, according to the report. However, the bulk of that is accounted for by its control of Central Huijin, the government’s main holding company for its stakes in China’s biggest banks.

CIC’s overseas assets — its true measure as a sovereign wealth fund — reached $147bn at the end of last year.

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