China's sovereign wealth fund reports loss

July 25, 2012 at 11:47 PM
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BEIJING, July 25 (UPI) -- China's sovereign wealth fund said it sustained a 4.3 percent loss on its overseas portfolio last year due to the slow global economic recovery.

In its 2011 annual report, the China Investment Corp. -- created in 2007 from the country's huge foreign exchange reserves, currently estimated at over $3 trillion -- also blamed its worst loss ever on the Eurozone debt crisis. A representative for the fund, Wang Shuilin, said the performance was not exceptional compared to the lackluster performances by sovereign wealth funds of some other countries, the official Xinhua news agency reported.

The annual report said the fund has earned a return of 3.8 percent on an annual basis since 2007.

The report said the fund received $30 billion from the State Administration of Foreign Exchange, making the exchange a shareholder. CIC, however, said that would not affect its independence in making investment decisions.

To meet its challenges, the CIC is seeking long-term investment, having extended the return period to 10 years, the report said. Wang said CIC increased investments in energy, real estate and infrastructure sectors, where returns would not be cashed in the short-run.

The Wall Street Journal said the $482 billion CIC, guarding against short-term market volatility, cut its holdings of public securities to 25 percent of its 2011 portfolio from 48 percent in 2010.

The Journal said CIC has spent billions on energy and natural resources since 2009, expecting the industry to benefit from China's economic growth and demand. However, the report said a slowdown in China's economic growth threatens the industry at least in the near term.

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