— This is the script of CNBC's news report for China's CCTV on January 15, Wednesday.
Welcome to the CNBC Business Daily.
China Investment Corporation, China's sovereign wealth fund, has more than $500 billion in assets under management. More than half of that is invested in developed countries.
But in an exclusive interview with CNBC, CIC's Chairman and CEO tells Bernie Lo how the fund is planning to diversify:
DING: Recently, I am interested in investment opportunities into infrastructure around the world. In the next 5-10 years, infrastructure investment will be a big theme for both emerging and developmed markets. So, we want to boost our investment to get better returns. In the past, CIC has had an overweight position on energy because of strategic importance. But since the global financial crisis, especially in the last two years, the returns from energy investments have not been great. Going forward, we may continue to invest in the sector but we will be extra careful.
CIC mostly makes big investments, so we need to diversify. We do not favor any particular sector. Our selection is purely based on financial returns. Going forward, we might increase investment in agriculture and food; real estate is a possibility; and we might maintain certain percentage of investment in energy too.
LO: Your investments are still quite heavily geared towards US equity, capital markets, I think a little more than 49%. Is there some target you have in mind? Is diversification one of your philosophies or priorities right now, to go beyond a narrow band of investments and widen your scope a bit?
DING: Right now, we have more than half of our assets invested in developed countries. This is because we are seeing a strong economic rebound in the U.S. over the past two years; and Europe is also in recovery mode. There are more investment opportunities. In the future, we will maintain our over-weight position in developed economies. Meanwhile, being an Asia-based sovereign wealth fund, we are also very interested in the opportunities in emerging economies. Compared to other sovereign wealth funds, we hope to increase our investments there. In the long run, we are bullish on Asia and other emerging economies.
Li Sixuan, from CNBC's Singapore headquarters.