China shifts investments into private hedge funds

China Investment Corporation (CIC), the country’s sovereign wealth fund, is continuing to shift its investments away from cash and is investing billions in hedge funds and private equity funds, according to chairman Lou Jiwei.

It had invested now “many times” the $500 million (R3.8 billion) that CIC was reported to have placed in hedge funds and private equity firms in June, Lou said at the weekend, noting the CIC was also investing in funds-of-funds.

Lou said its performance this year “has not been bad” following last year’s 2.1 percent fall in its global investments.

CIC had $297.5bn in assets and had 87.4 percent of its global portfolio invested in cash and cash equivalents at the end of last year, the fund said earlier this month.

In December, Lou said he did not “dare to invest in financial institutions” after losing money on investments in Blackstone Group and Morgan Stanley. CIC raised its stake in Morgan Stanley in June by buying an additional shares worth $1.2bn.

CIC aimed to allocate $6bn to hedge funds by the end of the year, company adviser Felix Chee said in June. He said he would run CIC’s hedge fund and proprietary trading effort.

The fund has also been buying shares in the property and resources sectors in recent months. It planned to buy shares of Songbird Estates, a London-listed company that controls the owner of more than half the buildings in the city’s Canary Wharf financial district, said Songbird chairman David Pritchard.

Songbird said CIC would buy a significant stake.

CIC is interested in boosting its Canadian presence after buying a stake in Teck Resources last month, the country’s finance minister Jim Flaherty said early this month. – Bloomberg

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China shifts investments into private hedge funds

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