China Investment Corp., the nation’s sovereign wealth fund, is trying to cut an “over-reliance” on U.S. debt as an economic recovery in the world’s biggest economy drives up interest rates, Chairman Lou Jiwei said.
The Beijing-based fund is adding stable-return assets, including infrastructure, manufacturing and real estate with good returns, Lou told a forum in Hong Kong today. Europe still faces a recession risk, and CIC, as the state fund is known, is “very cautious” on Japan investments, he added.
CIC, which helps manage the world’s largest foreign-currency reserves, will post a profit on its overseas investments for 2012 as monetary easing in Western countries boosted capital markets and investment returns, CIC’s Executive Vice President Jesse Wang said at a forum in China last month.
“With the economic recovery, it’s only a matter of time that U.S. interest rates will rise and those bonds will depreciate in value,” Lou said. “So our approach is limited buying. We’re hoping to add allocations to stable return, absolute return, stock and other assets to reduce reliance on U.S. debt.”
The fund had a 4.3 percent loss on its international investments in 2011, its worst performance since it was established in 2007, as its resources-heavy portfolio was hurt by declines in global commodity prices.