China Sovereign Wealth Fund Bounced Back With Second-Best Ever Performance in 2019
After a disappointing loss in 2018 amid stock market turbulence, China’s sovereign wealth fund saw a strong return on its overseas investments last year as global stocks rallied.
On Friday, China Investment Corp. (CIC) reported an annual net return on its overseas investments of 17.4% in 2019, a significant turnaround from a 2.4% net loss for the previous year, and the second highest rate of growth since it was founded in 2007. The highest figure was 17.6% in 2017.
Boosted by last year’s strong performance, CIC’s 10-year cumulative annualized net return was 6.6% as of Dec. 31, up from a 6.07% yield a year earlier and exceeding its target by 92 basis points, according to its 2019 annual report.
The fund last year slightly increased the proportion of stocks in its overseas portfolio to 38.9%, up 0.6 percentage points from the year before, with over half of its public equity holdings in the U.S.
With over $1 trillion in total assets, CIC is the world’s second-largest sovereign wealth fund by assets, behind Norway’s Government Pension Fund Global, according to data provider Sovereign Wealth Fund Institute.
Norway’s sovereign wealth fund saw a 19.9% return in 2019, or 1,692 billion kroner ($176 billion), mainly driven by positive equity investments. This was the highest return in kroner in the fund’s history.
Founded in 2007, CIC has registered capital of $200 billion, raised from special treasury bonds issued by the Ministry of Finance. The wholly state-owned fund invests in assets on a long-term basis around the globe to diversify China’s foreign exchange holdings.
While the Covid-19 pandemic has brought headwinds for globalization and sent shockwaves across global financial markets, CIC achieved better-than-benchmark performance in the first half of 2020 by adopting “an emergency management mode for dealing with extreme market scenarios,” Peng Chun, CIC chairman and CEO, said in the report.
Meanwhile, Norway’s sovereign wealth fund reported a $21 billion loss in the first half of the year, citing “major fluctuations in the equity market.”
Denise Jia contributed to this report.
Contact editor Joshua Dummer (email@example.com)
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