CIC net profit jumps 60pc on overseas gains

The net profit of China's US$575 billion sovereign wealth fund China Investment Corp (CIC) surged 60 per cent last year, helped by a 10.6 per cent return on its overseas investment portfolio.

Net earnings rose to US$77.4 billion last year, from US$48.4 billion in 2011, as global asset prices increased from the third quarter, in step with a burgeoning economic recovery, Ding Xuedong, CIC's new chairman, said yesterday.

CIC's performance comes as a relief for the fund, which has been criticised for its poor returns on investment since its inception in September 2007. But it also poses a challenge for Ding, who replaced Lou Jiwei this month. The new chairman is under pressured to generate better returns than his predecessor. CIC was created to manage part of the nation's US$3.5 trillion of foreign-currency reserves. It also holds stakes in state-controlled banks.

CIC's return on its overseas investment reached 10.6 per cent last year, compared with a loss of 4.3 percent in 2011. The annualised return on its overseas investment was 5.02 per cent for the five years through to the end of 2012, CIC said in its annual report.

"The return was decent in the latter period of Lou Jiwei's tenure, compared to Temasek, Singapore's sovereign wealth fund," said Ding Zhijie, a finance professor at the University of International Business and Economics. "People should tolerate short-term fluctuations in the fund's performance as CIC is a long-term investor."

Temasek, with assets of around US$170 billion, said this month that total returns to shareholders, including dividends, increased to 8.9 per cent last year, from 1.5 per cent the year before.