The Wall Street Journal reports,"China Investment Corp. is selling energy and commodity holdings while seeking to capitalize on recovering U.S. and European economies, a major shift in strategy for the $600 billion sovereign-wealth fund".
"Since late last year, CIC has unloaded more than $1.5 billion of shares in companies including AES Corp. , a U.S. power company, and GCL-Poly Energy Holdings Ltd. , a Hong Kong-listed green-energy company, according to regulatory filings by the companies. CIC, the world's fifth-largest government-controlled fund, has also sold stakes in two other Hong Kong-traded wind-power companies, according to filings".
"CIC, which purchased billions of dollars in resources-related holdings between 2009 and the first half of 2012, is closely watched by investors world-wide for signals on where China is steering its deep pools of capital. The shift comes as the fund's new leadership grapples with a changing investment landscape triggered by the paring back of easy-money policies in the U.S".
As the U.S. Federal Reserve starts to taper, or reduce, its bond-buying program intended to stimulate the U.S. economy, CIC is finding energy and resources plays aimed at emerging markets less attractive because capital is flowing back to the developed world, the people said.
Chinese companies last year plowed $44 billion into foreign mergers and acquisitions in oil, gas and mining, according to data provider Dealogic, up from $30 billion in 2012. But there are signs that China is growing more cautious. A top economic-planning official in December 2012 lauded Chinese efforts to secure mining assets abroad but cautioned against rising costs.
Meanwhile, CIC is showing greater interest in the rebounding U.S. and European economies. The U.S. economic recovery has been "accelerating" and Europe has "a lot of potential," CIC Chairman Ding Xuedong said at a January conference in Hong Kong. Mr. Ding, who took the reins at CIC in June, added that emerging markets could suffer "capital outflows or a credit crunch" if the Fed continues to taper.
The fund is considering moving its North American base to New York from Toronto and expanding its presence in Europe, the people close to the fund said, though no final decision has been made. CIC's team in Toronto, led by Winston Wenyan Ma, a former Wall Street banker, so far has mainly focused on doing energy- and resources-related deals in Canada. A potential move to New York could lead to more investments by the fund in private equity, real estate and other U.S. assets, the people said.
CIC, founded in 2007, invests part of China's vast hoard of foreign-exchange reserves abroad. The fund's focus on resources has been widely regarded as "strategically motivated," said Friedrich Wu, an adjunct associate professor at Nanyang Technological University in Singapore who follows CIC. "China, an export-dependent economy, requires access to secure supplies of energy and natural resources to power its economy," he said.
CIC officials have said the fund makes investment decisions based on commercial principles and energy investment was a good way for the fund to benefit from China's own economic growth.
CIC's international holdings returned 10.6% in 2012, the most recent data available.
