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Feeling Flush, China's CIC Opens Wallet
China's sovereign-wealth fund is anticipating a positive return on its investments this year and may ask the Chinese government for more capital to deploy, its chairman said.
China Investment Corp. Chairman Lou Jiwei, speaking on the sidelines of an economics conference in Beijing on Saturday, said investment in CIC's global portfolio for 'one month this year equaled that of the whole last year.' He didn't clarify whether he was referring to a specific month or an average.
The statement is the latest sign CIC is moving more aggressively to deploy its vast resources after sitting out much of 2008 amid the global financial crisis. CIC's plans are being watched by managers anxious to see the fund turn on its investment spigot.
'If the returns are not bad and the country's foreign reserves are still rising, we will ask for more to make further investment,' Mr. Lou said. China reported $2.132 trillion in foreign-exchange reserves at the end of June, up from $1.946 trillion at the end of 2008.
CIC has recently signaled a willingness to re-open the purse, selecting Morgan Stanley and Blackstone Group LP to help oversee new investments in hedge funds. It also this year bought stakes in China-focused alternative asset-management firm Citic Capital Holdings Ltd. and U.S. asset manager BlackRock Inc. and has been in discussions about allocating billions more to hedge funds.
Illustrating CIC's recent appetite for deals, the majority shareholder in Canary Wharf Group, which owns and manages a large business and shopping district in East London, said Friday it had reached a deal to raise money from a group of investors including the Chinese fund.
CIC, established in September 2007 with a chunk of China's foreign-exchange reserves, had a portfolio valued at $297.54 billion at the end of last year, according to the fund's annual report issued this month. A large amount of that is held in the stock of Chinese banks, whose share prices have risen sharply recently.
CIC invested just $4.8 billion in global markets last year, according to the annual report, and its portfolio declined 2.1%. Returns 'will certainly be positive' this year, Mr. Lou said.
Mr. Lou expressed concern over the economic outlook for the U.S., suggesting the current upturn could fade and cause a 'W-shaped' recovery. 'There are very big uncertainties' in the U.S. economy, he said.
