CIC wary of global political uncertainty

China’s sovereign fund is looking to make more direct deals in the US via a new outpost in New York.

China Investment Corporation, the country's $813 billion sovereign wealth fund, has warned that a global investment environment characterised by low growth and high volatility is further clouded by rising political uncertainty.

The institution posted net returns of 6.22 percent over the last year on its overseas investments, compared with -2.96 percent during the previous period, according to its annual report released today.

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.

Over the period, the fund increased its direct investments in infrastructure, particularly “high-quality core infrastructure assets”. Its direct investment arm, CIC Capital, signed 16 deals with a total commitment of about $5 billion in 2016. These include National Grid's gas distributed network in the UK, a natural gas pipeline in Brazil, Port of Melbourne and Australian rail and port operator Asciano.  

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

“Looking ahead, global growth for 2017 should pick up speed, but the downside risks cannot be overlooked,” noted Tu Guangshao, CIC's vice-chairman and president. “The multiple rounds of quantitative easing by key economies and the weak recovery in developed economies during the eight post-crisis years have led to keen competition for capital and to low returns.”

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.