CIC Released Annual Report 202027-08-2021
On August 27, 2021, China Investment Corporation (CIC) released the Annual Report 2020 (Annual Report) as approved by the Board of Directors.
The Annual Report disclosed CIC’s financials, performance, overseas investment activities and domestic equity management as at December 31, 2020. It also elaborated on CIC’s progress made in the past year on corporate governance, human resources, global outreach, and corporate social responsibility.
Mr. Peng Chun, Chairman and CEO of CIC, said in the message that the year 2020 was as eventful as it was extraordinary. Undaunted by the unprecedented challenges amid COVID-19, we remained consistent in our strategic focus and positioning as a long-term institutional investor, and forged ahead with a strategy that balanced pandemic response and business operations. As a result, we were able to post strong results in our overseas investment business despite severe headwinds. In parallel, our domestic equity management operations contributed positively to economic growth and social development. CIC thus closed out 2020 with all major goals and targets for the year successfully achieved.
The Annual Report shows that in 2020 and calculated on a USD value basis, the company’s overseas investments posted a net annual return of 14.07%. Our annualized cumulative 10-year net return reached 6.82%, beating our 10-year performance target by 128 basis points. As at the end of 2020, the aggregate state-owned financial assets under the management of Central Huijin reached CNY 5.19 trillion, up 8.6% from the beginning of the year. CIC’s total assets grew to USD 1.2 trillion, with net assets of USD 1.1 trillion.
Currently, CIC’s global portfolio consists of public equity, fixed income, alternative assets and cash products, respectively accounting for 38%, 17%, 43%, and 2%.
On portfolio management, faced with daunting challenges in the market, CIC fully tapped into the Information Superhighway mechanism and strengthened linkages between research and investment operations. We also performed rigorous stress tests on the total portfolio, dynamically optimized liquidity reserves, and made full use of our allocation toolkit to increase the total portfolio’s resilience and quality. The company activated crisis management plans, increased the frequency and rigor with which total portfolio checks were performed, and strengthened its business continuity and contingency plans to ensure preparedeness against extreme events. In the meantime, our investment decision-making and authorization mechanisms were further enhanced with the establishment of a Public Market Investment Committee and a Private Market Investment Committee. This reform has contributed to more robust project evaluation, and improved quality and efficiency in investment decisioning.
On investment activities, we capitalized on opportunities created by market mispricing, continued to optimize our public market investment footprint, and refined our strategy construction and manager allocation. To ramp up our private market investments and take advantage of the window of opportunity for post-pandemic investments, CIC expanded its network of and commitments to high-quality general partners (GPs), and exploited co-investment and co-sponsorship opportunities. These steps drove our private market commitments to a recent year high. We continued to find new ways to deploy capital overseas and enhance pertinent cooperation, e.g., pushed ahead with new bilateral fund initiatives. In addition, we established a sustainable investment policy framework and theme-based investment strategy, integrating environmental, social, and governance (ESG) factors into the investment management process. We also focused on creating post-investment value by helping our investees connect with the Chinese market and share in the dividends of China’s growth.
On domestic equity management, against the backdrop of the once-in-a-century COVID-19 pandemic, Central Huijin, as a shareholder, provided strategic guidance to the 17 state-owned financial institutions in its portfolio, and assisted them in taking decisive measures to combat the pandemic and support business re-opening. These efforts helped safeguard economic and financial stability, in particular by expanding financial services for micro, small, and medium-sized enterprises, private enterprises, as well as those in hard-hit sectors. Leveraging the various equity management tools at its disposal, Central Huijin encouraged its portfolio companies to develop new medium- and long-term strategies, further enhance their corporate governance, optimize their business composition, accelerate digital transformation, and improve their risk management frameworks. Central Huijin’s fiduciary capabilities were also enhanced: we further upskilled and expanded our roster of dispatched directors to empower them to discharge their duties more effectively.
In 2020, CIC remained committed to its corporate social responsibility while steadily ramping up development of its various businesses. COVID-19 is a global challenge that has impacted societies all around the world. CIC helped its portfolio companies curb the spread of the pandemic in China, and donated, as well as coordinated the provision of, medical supplies to numerous international partners. The company also made arrangements for an overseas hospital to participate in several video conferences on protection measures against COVID-19. As a responsible sovereign wealth fund, CIC also made relentless efforts for poverty alleviation and lifted 380,000 people out of poverty in Shibing County of Guizhou Province, Xunhua County of Qinghai Province, and Huining and Jingning Counties of Gansu Province.
“Amid the growing shades of dusk stand sturdy pines, Calm and tranquil as restless clouds sweep past.” Mr. Peng Chun observed that CIC will remain international, market-driven, and professional as it faces a rapidly changing post-pandemic international landscape that presents both new opportunities and challenges in the investment arena. While innovating our strategy implementation pathways to keep abreast of the times, the company, under the guidance of its Board of Directors, will continue to build itself into a world-class sovereign wealth fund by further strengthening international investment collaboration and developing new modalities for outbound investment. We look forward to broadening our exchanges with our peers and to working together towards a more open, equitable, and transparent international investment environment that will enable us to grow together through professional, pragmatic, and sustainable investment partnerships.
Please see CIC Annual Report 2020 for more information.