China Investment Corp. Reduces Holdings of Public Securities

CIC said in its 2011 annual report released Wednesday that public equities made up 25% of its global portfolio at the end of last year, down from 48% at the end of 2010. Long-term assets--which include direct investments in nonpublic companies and private equity--and hedge funds together accounted for 43% of its portfolio. Though it disclosed few details of its moves, it said it made direct investments in oil and gas, mining and infrastructure to shift toward "lower-risk assets."

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CIC has spent billions of dollars on energy and natural resources since 2009, as it expects the industry to benefit from China's economic growth and demand for energy. So far, it has mainly made the investments through buying stakes in energy and resource companies. CIC's investments in those areas include $3.15 billion in French utility GDF Suez's GSZ.FR +2.60% exploration and production division; $1.5 billion in Teck Resources, TCK +1.72% a Vancouver-based metals and mining company; $1.6 billion in AES Corp., AES +1.53% a Virginia-based power company; and $500 million in SouthGobi Energy Resources Ltd., 1878.HK +3.12% a Canadian mining company with operations in Mongolia.

But that sector has been volatile, with some of CIC's holdings in the area falling below the prices the fund first paid for the stakes. What's more, a slowdown in China's economic growth threatens to hurt the fortunes of the industry, at least in the near term.