China sovereign fund CIC says cautious of US investment amid trade war

[BEIJING] China Investment Corp (CIC) on Friday said the Sino-US trade war has made it more cautious about investing in the United States, after the Chinese sovereign wealth fund posted a dive in yearly profit.

China and the United States are enmeshed in a tit-for-tat trade war that has led to escalating import tariffs at a time of slowing global economic growth.

The trade war "is making us more cautious about investing in the US", CIC president Ju Weimin said at a news conference in Beijing.

The fund "will not pose a threat to the countries it invests in, we insist on legal compliance", said Mr Ju, adding the wealth fund will reduce the riskiest assets in its portfolio, and seek opportunities in industries such as manufacturing, technology, telecommunications and healthcare.

CIC is a shareholder in China's largest banks including China Development Bank Corp and Industrial and Commercial Bank of China Ltd .

On Friday, it posted a 37.2 per cent fall in 2018 net profit at US$65.06 billion, citing a complex global financial environment and market turmoil. Its total investment income was fell 40.7 per cent to US$67.84 billion.

"The global economy and financial situation is complex, international capital markets are in turmoil, the risk for assets is growing," said chairman Peng Chun. Mr Peng described the current Sino-US relationship as "delicate".

The fund "feels a lot of pressure", Mr Peng said, adding CIC's long-term returns outlook is stable.

CIC booked a minus 2.35 per cent net return on overseas investments last year, versus 17.59 per cent in 2017. However, its annualised accumulative investment return for 2008 to 2018 was 6.07 per cent, exceeding the fund's performance review target, Peng said.

The fund is involved in 44 projects worth US$26 billion under the government's Belt and Road initiative, said Mr Ju.

"Some overseas countries have tightened their investment oversight," said Mr Peng, adding Chinese investment entities have faced prejudicial treatment due to increased protectionism.

CIC plans to actively engage in cross-border investment such as multilateral funds, Mr Peng said.

Headquartered in Beijing, CIC was founded in 2007 to help China earn a higher return on its foreign exchange reserves.

REUTERS