Zhao Haiying
Photographer: David Paul Morris / Bloomberg
Photographer: David Paul Morris / Bloomberg
China Investment Corp. yield of more than 12% on foreign investments in 2020 after markets rallied on monetary policy, marking a start-up year for China’s $ 1 trillion sovereign wealth fund.
The unaudited results bring the 10-year moving average of the Beijing-based asset to more than 6.6%, exceeding the target. Government Vice President Zhao Haiying expects calmer markets this year even as policymakers try to stimulate growth without exploding runaway inflation.
“2020 was a very exciting year,” Zhao, who is also a member of the People’s Political Consultative Conference of China, said in an interview before calling the main advisory group for their annual meetings in Beijing.
CIC maintained its position as a long-term investor despite market shifts, Zhao said. “We withstood the test of strong winds and waves, and gave fairly good results.”
The company will maintain its strategy to diversify and direct investments to 50% of their global portfolio by the end of 2022. It moved closer to that target last year even after the grant of such funds fell in 2019 as stocks accumulated, she said, without giving details.
“Last year tested us in terms of both package yield and investment management, but it happened well, ”said Zhao.
CIC changed its distribution with “fat” technology stocks and Asian companies, Zhao said. The MSCI World Index rose 14% in 2020 after recovering from a sharp decline earlier in the year.
The company updated its investment committees earlier this year, creating two new bodies to oversee investments in public and non-public funds, Bloomberg reported in January. The move was intended to improve decision-making efficiency, deepen collaboration across teams and better implement asset allocation strategies for the whole company, “so that everyone is on the same page, ”Said Zhao.
Other property
While CIC is trying to eating other assets for the long-term stable yield, these investments fell 2 percentage points to around 42% in 2019 as stocks and bonds accumulated. The measure climbed again last year, and the company pledged the highest level of capital in private contracts, including private equity and credit, reflecting further increases, Zhao said. She declined to provide details as the company has not published its 2020 annual report.
As global markets emerge from the pandemic-wrought crisis, governments should pay more attention to the long-term impact of their policies on economic productivity, even if stimulus packages help alleviate pain to consumers and full companies, said Zhao, who is also the fund’s main strategist. officer.
“We expect the markets this year, overall, to be relatively stable for investors,” Zhao said. “But policy makers face major challenges this year and next” with little room for change amid high long-term debt and low interest rates.
Loose currency policies have fueled market rallies in developed countries as U.S. Zhao warns that valuations must be supported by long-term economic growth and corporate employment. “Motivation alone is not enough,” she said.
Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said this week he is “deeply concerned” about emerging risks from bubbles in global financial markets and the country’s property sector. Bubbles in the U.S. and European markets could explode as their rallies go to the other side of the underlying economies and may correct “sooner or later,” he said.
Global leaders should also strengthen trust and cooperation on issues ranging from climate change to fighting Covid-19, Zhao said. “The global economy remains fragile and cannot afford the wrong money.”
– Supported by John Liu, and Dingmin Zhang