Caixin
Sep 21, 2019 06:25 AM
FINANCE

China Sovereign Wealth Fund Recorded 2.35% Loss in 2018

China Investment Corp. recorded a 2.35% loss for 2018. Photo: VCG
China Investment Corp. recorded a 2.35% loss for 2018. Photo: VCG

China Investment Corp. (CIC), the nation’s $941 billion sovereign wealth fund, reported a disappointing investment return for last year amid turbulence in global stock markets.

The fund reported a 2.35% loss on overseas investments in 2018, a stark contrast to a 17.5% gain a year earlier. The result still beat a benchmark used by other global sovereign wealth and pension funds by 371 basis points, or 3.71 percentage points, CIC said in its annual report.

CIC Chairman Peng Chun attributed the decline in returns to the worst performance of global stock markets in a decade. The MSCI World Index plunged 9.4% in 2018.

Peng said the global capital market remains challenging this year because of proliferating geopolitical disputes, the spread of unilateralism, intensifying trade tensions and slowing global growth.

CIC is not the only sovereign wealth fund to record a loss last year. Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund with total assets of $945 billion, posted a 6.1% loss in 2018.

Abu Dhabi Investment Authority (ADIA), the world’s third-biggest sovereign wealth fund behind Norway and China, does not publish annual returns but said its 20-year and 30-year annualized rates of return were 5.4% and 6.5% respectively in 2018.

Longer term, CIC’s 10-year annualized yield through 2018 was 6.07%, exceeding its target by 45 basis points.

CIC was founded in 2007 with registered capital of $200 billion. It had total assets of $940.6 billion in at the end of 2018, its annual report showed.

The fund last year slashed the proportion of stocks in its overseas portfolio to 38.3% from 43.6% in 2017 but increased alternative investments to 44.1% from 39.3%.

CIC is also a shareholder in 17 Chinese financial institutions, including policy bank China Development Bank Corp. and the five largest state-owned banks.

On the same day CIC released its annual report, the company announced a joint investment agreement with Russian Direct Investment Fund, Russia’s sovereign wealth fund.

The two sovereign wealth funds pledged to launch the Russia-China Technology Investment Fund with a target capital of $1 billion.

The agreement was signed Tuesday in St. Petersburg in the presence of Russian Prime Minister Dmitry Medvedev and Chinese Premier Li Keqiang.

Contact reporter Denise Jia (huijuanjia@caixin.com)

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