Wed, Sep 28, 2016
A A A
Welcome mteam
RSS

Sovereign Wealth Funds Briefing - Category | Research more

What’s In Saudi Arabia’s Blueprint for Life After Oil?

Posted on 26 April 2016 by VRS  |  Email |Print

Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman unveiled his “Saudi Vision 2030” to reduce the kingdom’s reliance on oil. The blueprint, approved by King Salman, includes plans to sell less than 5 percent of Saudi Arabian Oil Co., or Aramco, the creation of the world’s largest sovereign wealth fund and raising non-oil revenue.
Here’s a guide to the main elements of the plan, announced on Monday in Riyadh and during Prince Mohammed’s interview with Saudi-owned Arabiya television. The prince had disclosed some of the proposals in two interviews with Bloomberg News………………………………………..Full Article: Source

SWFs ‘Not to Blame for Equity Crash’

Posted on 26 April 2016 by VRS  |  Email |Print

Market commentators that have blamed sovereign wealth funds (SWFs) for driving the recent equity market sell-off may be wide of the mark, according to advisory firm GeoEconomica.
The majority of drawdowns from SWFs last year were smaller than their annual investment returns, wrote GeoEconomica Managing Director Sven Behrendt in a note published by the International Forum of Sovereign Wealth Funds. This is despite a series of commentaries claiming large withdrawals from SWFs have led to price falls across stock markets………………………………………..Full Article: Source

Five Questions About The New Saudi Economic Plan

Posted on 25 April 2016 by VRS  |  Email |Print

The Kingdom will introduce its plan for an economic and financial restructuring of its sovereign wealth fund. On the scale of $2 trillion, this new Public Investment Fund (PIF) would be the largest in the world and would include a compelling IPO of a small portion of Saudi Arabia’s national oil company, Saudi Aramco.
The country relies almost exclusively on oil profits to fund the government. No one outside of the government knows the exact numbers, but some estimates say 90% of the Kingdom’s budget comes from Aramco………………………………………..Full Article: Source

Commodities slump stalling sovereign wealth growth

Posted on 21 April 2016 by VRS  |  Email |Print

Sovereign wealth funds in commodities economies are being forced to sell off assets to manage government deficits, slowing growth for the sector. The 2016 Preqin Sovereign Wealth Fund Review shows that while assets held in sovereign wealth funds collectively grew by $200 billion to hit $6.51 trillion in the year to March 2016, this growth was significantly slower than in previous years.
According to Preqin premium publications manager Selina Sy, growth has been hampered largely by sovereign wealth funds in oil-producing nations “fulfilling their function by providing for budget deficits in more challenging economic periods.” In some cases, funds like this saw their assets under management more than halved as a result………………………………………..Full Article: Source

Global sovereign wealth fund assets rise to $6.51 trillion

Posted on 20 April 2016 by VRS  |  Email |Print

Sovereign wealth fund (SWF) assets increased by $200 billion in the year to March 2016 and now stand at $6.51 trillion despite recent market volatility and low oil prices, data from research provider Preqin showed on Tuesday.
That represents a yearly growth rate of about 3 percent, compared with rates of 16-17 percent in previous years. But SWFs now hold more than double the assets seen in 2009 when the aggregate AUM totalled $3.22 trillion. The growth was driven by non-commodity funds, which added some $290 billion in assets, whilst SWFs reliant on windfall revenues from oil and gas lost $10 billion, Preqin said………………………………………..Full Article: Source

Preqin: Sovereign wealth fund assets up 3.2% in year; oil-dependent funds drop

Posted on 20 April 2016 by VRS  |  Email |Print

Assets held by sovereign wealth funds across the globe increased 3.2% to $6.51 trillion in the 12-month period through March, driven by growth in non-commodity funds, Preqin said. The research firm reported that funds that do not derive their assets from commodities added $290 billion in assets over the year, while funds reliant on hydrocarbon assets, including oil, lost $10 billion.
Other commodities funds lost more than half of their wealth, dropping by more than half to $50 billion, from $130 billion a year earlier. Preqin, which analyzed the growth and asset allocations of 74 sovereign wealth funds, highlighted in its research the effect of the oil price collapse on investors………………………………………..Full Article: Source

Newton Capital Sees Sovereign Wealth Funds Easing Retrenchment

Posted on 12 April 2016 by VRS  |  Email |Print

Sovereign wealth funds reined in their investments at a slower pace in the first quarter, according to Helena Morrissey, chief executive officer of London-based Newton Capital Management Ltd.
Funds have been liquidating assets and repatriating capital to shore up domestic economies rocked by slumping oil and commodity prices. They pulled “a huge amount” from markets worldwide in late 2015, Morrissey, who helps oversee $69.2 billion, said in a Bloomberg Television interview with Manus Cranny………………………………………..Full Article: Source

Sovereign wealth funds like what they see in U.S. middle market

Posted on 12 April 2016 by VRS  |  Email |Print

Sovereign wealth funds manage staggering sums of money. But that doesn’t mean they’re so big they only invest with the likes of Blackstone Group, Carlyle Group and Kohlberg Kravis Roberts & Co.
From the New Zealand Superannuation Fund to the Saudi Arabia General Organization for Social Insurance, from the Alaska Permanent Fund Corporation to the Abu Dhabi Investment Authority, sovereign wealth funds are channeling money into U.S. mid-market funds………………………………………..Full Article: Source

The Truth Behind Saudi Arabia’s $2 Trillion Sovereign Wealth Fund

Posted on 11 April 2016 by VRS  |  Email |Print

Though Saudi Arabia’s plan of a $2 trillion fund exudes power and confidence, raising a megafund of that size is practically next to impossible, unless crude oil prices see a significant appreciation or Saudi Arabia plans to sell a higher portion of Aramco.
The Saudi Deputy Crown Prince Mohammed bin Salman has outlined ambitious plans for the future of the Kingdom in his five-hour long interview with Bloomberg. He wants to reduce Saudi Arabia’s dependence on oil; however, there are numerous hiccups to his proposed plans………………………………………..Full Article: Source

Temasek Sees Valuation Concerns in Chinese Technology Industry

Posted on 06 April 2016 by VRS  |  Email |Print

There is valuation concern within China’s technology industry after investors piled into the sector in the last couple of years, said an executive of Temasek Holdings Pte, an investor in e-commerce giant Alibaba Group Holding Ltd. before its 2014 initial public offering.
The Singapore state investment company is considering moving to earlier-stage investments in the industry as valuations get higher for companies that move closer to initial public offerings, said Wu Yibing, Temasek’s China head, at the Credit Suisse Asian Investment Conference in Hong Kong on Tuesday………………………………………..Full Article: Source

Sovereign Funds: Fiscal Framework, Governance and Investment

Posted on 24 March 2016 by VRS  |  Email |Print

Since the global financial crisis of 2008-2009 and the slowdown of economic growth globally, popular demands for ad hoc use of sovereign wealth to support growth has grown visibly. New funds continue to be created as both the sector and its assets grow.
Yet to prevent rapid dissipation of sovereign wealth as fiscal resources for countercyclical fiscal policy, clear fiscal rules and fiscal frameworks are needed to complement the governance structure and investment strategy. Sovereign Funds draws on industry practitioners, industry observers and academics to present the latest thinking on state-owned investment funds from a global perspective. With exclusive insights, case-study chapters and in-depth sectoral analysis, the contributors assess the present state of sovereign wealth funds offer signposts for future development. (Press Release)

Norwegian wealth fund has a New York state of mind: Gadfly

Posted on 10 March 2016 by VRS  |  Email |Print

On the website for Norway’s Sovereign Wealth Fund, a hypnotic and constantly-changing ticker indicates how much kroner the fund is losing and, mostly, gaining. People in London and New York worried about property prices might find it calms their nerves.
The US$830 billion (S$1.14 trillion) Government Pension Fund Global, the biggest sovereign wealth fund, reported results for 2015 on Wednesday: an overall return of 2.7 per cent, achieved despite volatile currency and equity markets, negative interest rates and worries about global growth. Still, that’s its weakest return in five years and worse than the average annual return of 3.7 per cent (after inflation and management costs) since 1998 when the fund’s current management structure was set up………………………………………..Full Article: Source

U.A.E. Central Banker Says SWF Withdrawal Reports `Overblown’

Posted on 03 March 2016 by VRS  |  Email |Print

Khalifa Al Kindi, chairman of the United Arab Emirates central bank, said that media coverage of withdrawals by sovereign wealth funds has been exaggerated, amid investor concern that the funds are pressuring global stock markets.
“I think it’s overblown,” Al Kindi, who is also founder of the Abu Dhabi Investment Council, said Wednesday at a conference in the city. “We have been exposed to that in the 80s and early 90s and now with the oil price at these levels you will be using your SWF to withdrawn from. We still have a long way before borrowing from outside world.”……………………………………….Full Article: Source

Sovereign-wealth funds

Posted on 26 February 2016 by VRS  |  Email |Print

China’s four sovereign-wealth funds have $1.5 trillion-worth of assets between them. None is larger than Norway’s $825 billion government pension fund, according to the Sovereign Wealth Fund Institute (SWFI), a think-tank. Norway’s fund, like many others, is fed by revenues from natural resources: oil-and-gas-based sovereign-wealth funds make up 56% of the market by asset value.
The falling oil price means many countries sold assets last year to finance budget deficits. Outflows have mainly been from liquid assets like equities, which may have contributed to stockmarket turbulence this year. The SWFI predicts that another $404 billion could be withdrawn from listed equities in 2016………………………………………..Full Article: Source

Are $7 Trillion Sovereign Wealth Funds Behind Market Plunge?

Posted on 23 February 2016 by VRS  |  Email |Print

2016 has featured a poorly explained stock market plunge. Without a clear explanation, investors are at a loss about how to make intelligent decisions. If oil is the culprit, should investors buy now that OPEC and others are getting together to freeze production? If markets China’s slowing growth and debt woes are the cause, should they cheer now that China has replaced its markets regulator or will its markets continue to lurch awkwardly?
Since these stories are blasted around the world, it is hard to see how they could give an investor any advantage in trying to beat the market. I think that the real reason for market movements — the ebb and flow of capital to and from equities — is considered protected speech by securities regulators………………………………………..Full Article: Source

How to invest like a sovereign wealth fund

Posted on 17 February 2016 by VRS  |  Email |Print

Sovereign wealth funds (SWF) are like a country’s savings account. They’re money a country doesn’t need right now that’s saved for a future rainy day. And although SWFs control trillions of dollars, individual investors can still learn a lot about portfolio management from them.
As of December 2015, there were 79 SWFs around the world, managing US$7.2 trillion, according to the Sovereign Wealth Fund Institute. That’s more than all the world’s hedge funds and private equity funds combined. And it’s more than double the US$3.4 trillion controlled by SWFs at the beginning of 2008………………………………………..Full Article: Source

Free Lunch: How sovereign wealth funds can save capitalism

Posted on 16 February 2016 by VRS  |  Email |Print

Feel the force: Many worry that with the collapse in commodity prices, sovereign wealth funds will destabilise markets as they sell off assets. In the short run, SWFs may indeed cause volatility, as the International Monetary Fund warned in October. But in the long run, they should be seen as a force for good — and be used as such much more than they have been.
In corporate capitalism, the bulk of economic activity is carried out through a system that involves two dimensions of decentralised decision making. Goods and services are made and sold out by the dispersed, impersonal production units we call corporations………………………………………..Full Article: Source

10 things you probably don’t know about sovereign wealth funds

Posted on 02 February 2016 by VRS  |  Email |Print

Sovereign wealth funds are massive investment vehicles with trillions of dollars in assets. However, these wealth giants are little known and less understood than other types of investments vehicles.
We’ve assembled 10 facts to help you figure out what sovereign wealth funds are all about. Check them out below. The Kuwait Investment Authority was the first sovereign wealth fund ever created. In light of the discovery of oil, this fund was established in 1953 to invest excess oil revenues. One of the largest wealth funds in the world, it is estimated to have over $592 billion in assets………………………………………..Full Article: Source

Analysis: Norway’s Government Pension Fund Global

Posted on 02 February 2016 by VRS  |  Email |Print

A greater focus on real assets through the introduction of an unlisted infrastructure portfolio, and the expansion of the real estate exposure of Norway’s NOK7.1trn (€733bn) sovereign wealth fund, could soon bring to an end one of the great certainties among asset owners – the Government Pension Fund Global’s stable, almost static asset allocation.
The fund may also take on greater equity risk, and increase its strategic allocation beyond 60%, which currently means it owns about 2.5% of the European listed market and 1.3% of all listed stocks. The potential changes mark a sea change, as the strategic asset allocation at Europe’s largest asset owner has remained largely unchanged for nearly a decade………………………………………..Full Article: Source

Aberdeen Sees Sovereign Assets Shrink $19 Billion in Two Years

Posted on 28 January 2016 by VRS  |  Email |Print

Aberdeen Asset Management Plc has seen sovereign wealth-fund assets shrink by about 13 billion pounds ($19 billion) since a peak in 2013 as clients from oil-dependent countries cashed out and markets slumped.
Chief Executive Officer Martin Gilbert said SWF’s now represent about 2.5 percent, or 7 billion pounds, of Aberdeen’s total assets under management. That’s down from 10 percent two years ago. Aberdeen rose Wednesday after the company said outflows slowed in the first quarter and more cost cuts were announced………………………………………..Full Article: Source

Are Sovereign Wealth Fund Liquidations Responsible for Current Market Turmoil?

Posted on 21 January 2016 by VRS  |  Email |Print

The plunge continues apace. The S&P is now well below its August 24 panic lows, with the Nasdaq knocking on the door within 100 points of that critical support zone. The Dow Jones is about 300 to 400 points away.
With some blaming the rout on the possibility of more Federal Reserve rate hikes and others looking towards China, the real answer may actually be oil. The first Fed rate hike has not even remotely affected credit levels, so its effect on stocks can only be psychological and temporary. The December rate hike only served to neutralize excess bank reserves by $250 billion, and with $2.12 trillion (see table 2 column 1) in excess to go, there is plenty of room to hike rates further without affecting the credit supply at all………………………………………..Full Article: Source

Global Pension and Sovereign Wealth Fund Investment in Hedge Funds

Posted on 18 January 2016 by VRS  |  Email |Print

Our new industry survey, “Global Pension and Sovereign Wealth Fund Investment in Hedge Funds: The Impact of Direct Investing”, conducted through in-depth one-on-one interviews with global investors managing $1.65 trillion in assets under management as well as hedge fund managers representing $186 billion in assets under management, looks at both the increase in institutional assets and how a shift to “direct” investing presents both an opportunity and a set of challenges to hedge fund managers looking for this capital.
In the report we look at the macro pension and sovereign wealth fund environment in terms of its overall capital, growing focus on “Alternatives’ and growth of hedge fund allocations from these segments. In addition, we look at which hedge fund are optimal targets for pension and sovereign wealth fund investors, and discuss why size is a critical factor and how the criteria required to pass the institutional threshold have expanded since 2008………………………………………..Full Article: Source

Sovereign Wealth Funds Spent Less in 2015

Posted on 12 January 2016 by VRS  |  Email |Print

The total direct transaction amount in 2015 by sovereign funds is US$ 114 billion compared to US$ 122 billion in 2014. However, when calculating all public investors, which includes large public pensions, direct transactions total US$ 211 billion in 2015 versus US$ 186 billion in 2014.
Leading the charge for asset-rich pensions were Canadian institutional investors such as Canada Pension Plan Investment Board (CPPIB), Ontario Teachers’ Pension Plan (OTPP) and Caisse de dépôt et placement du Québec (CDPQ)………………………………………..Full Article: Source

Sovereign Funds Liquidating Assets Increases Pressure on Global Economies

Posted on 12 January 2016 by VRS  |  Email |Print

Tumbling oil prices are affecting more than just energy firms. The ripple effect has now hit global asset managers, as governments in the Gulf and beyond – short on cash – are withdrawing billions of dollars, the Financial Times recently reported.
State institutions withdrew at least $19 billion in the third quarter, mostly to close the gaps in national budgets and reduce borrowing, the piece stated – with more money is expected to be withdrawn in the coming months. Moreover, the Wall Street Journal reported that sovereign-wealth funds yanked roughly $100 billion from asset managers in the six months to Sept. 30………………………………………..Full Article: Source

Sovereign wealth fund deals fall 13 pct in fourth quarter

Posted on 11 January 2016 by VRS  |  Email |Print

Sovereign wealth funds made $23.5 billion worth of overseas acquisitions in the fourth quarter of 2015, down 13 percent from the third quarter, although big infrastructure and property deals remained popular.
Thomson Reuters data showed that sovereign wealth funds (SWFs), which invest windfall revenues from oil and other commodities for future generations, were involved in 25 deals during the October-December period, down six from the previous quarter. Over the full year, SWFs invested in 127 transactions, down from 148 in 2014. The total value of 2015’s deals amounted to $68.7 billion, down 6.9 percent from $73.8 billion in 2014………………………………………..Full Article: Source

Sovereign wealth funds: What is Santiago for?

Posted on 07 January 2016 by VRS  |  Email |Print

Despite signing up to the Santiago Principles, most sovereign wealth funds don’t observe them, nor do they have to. Isn’t it time the markets lost patience with their ‘I signed, therefore I am transparent’ approach?
Peter Costello faced a challenging gig. The chairman of the Australian Government Future Fund, better known to many as the country’s longest-serving treasurer, under John Howard’s government, was presenting a keynote speech at a sovereign wealth funds conference in Milan, but found himself addressing a room full of people milling around a buffet table………………………………………..Full Article: Source

Top 10 Sovereign Wealth Fund Game-Changers of 2015

Posted on 05 January 2016 by VRS  |  Email |Print

For sovereign funds regarding the falling price of oil, it is worth recalling Friedrich Nietzsche’s aphorism: “That which does not kill us makes us stronger.” Sovereign funds in the Gulf have increased exercising discipline from the sizable allocations of 2009 and 2010. SWFI research staff have composed the top ten game-changers for sovereign wealth funds in 2015.
10.) Smart Beta Lives: Many active investment managers despise the term “smart beta.” According to Investopedia.com, smart beta was the most searched for term in its dictionary in 2015. Google searches for smart beta continue to grow. Wealth funds continue to tinker with smart beta strategies. Some sovereign funds and pensions even partner with providers to back new product launches………………………………………..Full Article: Source

With oil prices skidding, Gulf nations begin selling sovereign wealth fund assets

Posted on 04 January 2016 by VRS  |  Email |Print

Oil-rich Gulf sheikhdoms are being forced to raid their sovereign wealth funds to shore up their budgets. With US crude oil prices falling below $40 per barrel in December, they have no choice but to reach into these rainy-day savings. For now, they can hold on to some of their trophy assets, like strategic investments in Volkswagen or Barclays. But if crude prices keep tumbling, a fire sale will be hard to avoid.
During the most recent energy boom, the six members of the Gulf Cooperation Council — including Saudi Arabia, Qatar and Kuwait — amassed sovereign funds worth more than $2.3 trillion. These assets have traditionally comprised a mix of debt and other securities, in addition to influential stakes in some of the world’s biggest companies such as Glencore, VW and Barclays………………………………………..Full Article: Source

Arab sovereign wealth fund exodus just beginning

Posted on 30 December 2015 by VRS  |  Email |Print

Oil-rich Gulf sheikhdoms are being forced to raid their sovereign wealth funds to shore up their budgets. With U.S. crude oil prices falling below $40 per barrel in December, they have no choice but to reach into these rainy-day savings. For now, they can hold on to some of their trophy assets, like strategic investments in Volkswagen or Barclays. But if crude prices keep tumbling, a fire sale will be hard to avoid.
During the most recent energy boom, the six members of the Gulf Cooperation Council – including Saudi Arabia, Qatar and Kuwait – amassed sovereign funds worth more than $2.3 trillion. These assets have traditionally comprised a mix of debt and other securities, in addition to influential stakes in some of the world’s biggest companies such as Glencore, VW and Barclays………………………………………..Full Article: Source

‘Politicised’ SWFs earn lower returns

Posted on 30 December 2015 by VRS  |  Email |Print

Sovereign wealth funds that are “highly politicised” earn lower returns on their stock-market investments than more independent peers, according to new academic research. An analysis of more than 1,000 sovereign wealth fund investments in publicly traded companies found that shares in those companies rose less following a purchase by a sovereign wealth fund compared with almost 6,000 comparable stock purchases by private investors.
The so-called SWF discount was worse when funds with strict government oversight bought shares. There was no discount when Norway’s independently managed sovereign wealth fund bought shares, according to Veljko Fotak of the University at Buffalo, who wrote the report with Bernardo Bortolotti of Turin University in Italy and William Megginson of the University of Oklahoma………………………………………..Full Article: Source

‘Politicized’ Sovereign Funds Earn Lower Returns, Study Says

Posted on 28 December 2015 by VRS  |  Email |Print

Sovereign-wealth funds that are “highly politicized” earn lower returns on their stock-market investments than more independent peers, according to new academic research. An analysis of more than 1,000 sovereign-wealth fund investments in publicly traded companies found that shares in those companies rose less following a purchase by a sovereign-wealth fund compared with almost 6,000 comparable stock purchases by private investors.
The so-called SWF discount was worse when funds with strict government oversight bought shares. There was no discount when Norway’s independently managed sovereign-wealth fund bought shares, according to Veljko Fotak of the University at Buffalo……………………………………….Full Article: Source

5 Things to Know About Sovereign-Wealth Funds

Posted on 28 December 2015 by VRS  |  Email |Print

Sovereign-wealth funds have surged in number and assets since 2007, bolstered in part by the climb in oil prices. Now with oil’s slump, some funds are shrinking. But because many of them don’t disclose their assets or strategy, they represent a large black box in the global financial system, The Wall Street Journal r​eports​.
Here are five things to know about sovereign-wealth funds: 1. They have gotten bigger: The world’s sovereign-wealth funds together have assets of $7.2 trillion, according to the Sovereign Wealth Fund Institute, which studies them. That is twice their size in 2007………………………………………..Full Article: Source

Petrodollars And Sovereign Wealth Funds

Posted on 18 December 2015 by VRS  |  Email |Print

Discussion of sub-$50 crude oil on SWFs (Sovereign Wealth Funds) and the resulting reversal in flows to equity, bond, commodity, capital and asset markets. Brief discussion of ED, or “euro/dollar,” liquidity. Brief discussion of the effects of a potential dollar melt up.
Funded by oil revenues, mostly, it is estimated that sovereign wealth funds have amassed at least $7 trillion in assets, and quite likely significantly more than that…. That sets up a sort of petro-stock flow, operating in an almost direct manner exactly as the wrongly characterized petro-dollar is thought to………………………………………..Full Article: Source

Outflow to Rise as Arab Sovereign Wealth Funds May Pull Out: Credit Suisse

Posted on 16 December 2015 by VRS  |  Email |Print

The sharp fall in crude prices, now at an 11-year low, is leading to withdrawal symptoms among sovereign wealth funds in the Arab world, which may hasten foreign capital outflows from the domestic market, Swiss brokerage Credit Suisse said. “At these oil prices, the West Asian economies are struggling to manage their budgets. Every 2-3 months, they put in redemption requests to some of the largest funds and then they are forced to sell. That selling pressure is hitting us,” managing director Neelkanth Mishra said.
The redemptions may not be immediate after every fall in crude prices and each sovereign wealth fund will take a call based on the budgetary pressures a particular country faces, he further said………………………………………..Full Article: Source

Mideast SWFs strike 38 global realty deals worth $65bn in 9 months to Sept

Posted on 16 December 2015 by VRS  |  Email |Print

Sovereign wealth funds (SWFs) in the Middle East remained “active purchasers” of global real estate this year with some 38 deals worth $65bn transacted in nine months up to September, data available with JLL, a real estate investment and advisory firm, show.
While the number of overseas transactions has declined from the 74 deals seen in 2013, the value of investment has remained high and is likely to exceed that experienced in 2014, JLL said. “The volume of investment is expected to decline in 2016 as we enter a prolonged period of lower oil prices that will cause sovereigns to reconsider their objectives and strategies,” JLL said………………………………………..Full Article: Source

Oil linked SWFs to hit marts

Posted on 16 December 2015 by VRS  |  Email |Print

While a rate hike by the US Federal Reserve could lead to outflow of funds from emerging market equities, another worrying factor that is now emerging on the global front is the persistent fall in crude oil prices, which if continues for an extended period of time could prompt some of the sovereign wealth funds (SWF) to cut their equity market investments. Among the various categories of FPI, sovereign wealth funds are the largest investors in the Indian market.
According to data available with the National Securities Depository Ltd, sovereign wealth funds hold equity assets worth `1.73 lakh crore as at the end of October 2015. “With the sharp fall in the global crude oil prices, most of the oil producing countries especially in the Middle-East would find it difficult to meet their budget deficits. If the oil prices continue to remain weak and fall further from the current levels, these sovereign wealth funds will not have any other option than to sell their equity market investments. But this will happen over a period of time,” said Gopal Agrawal, CIO, Mirae Asset Global………………………………………..Full Article: Source

After glory days, cheap oil forces sovereign funds to retreat

Posted on 15 December 2015 by VRS  |  Email |Print

The glory days of some oil-based sovereign wealth funds could be behind them now that cash-strapped governments are raiding the coffers to plug yawning budget gaps, with investment returns too weak to make up the shortfall. This is forcing some funds to sell assets to find ready cash, raising concerns that if this process accelerates, it could drive down the price of equities and other assets - creating a vicious circle.
Over the past two decades, sovereign wealth fund (SWF) assets have grown to as much as $7 trillion, according to Morgan Stanley, including everything from direct stakes in companies to luxury property assets. But those funds that rely on their governments’ oil export revenues for their main source of new money - such as in Saudi Arabia, Russia or Norway - now face a double whammy………………………………………..Full Article: Source

S&P affirms AAA rating, stable outlook for Temasek

Posted on 15 December 2015 by VRS  |  Email |Print

Ratings agency Standard & Poor’s (S&P) affirmed Temasek Holdings’ AAA long-term credit rating and stable outlook yesterday. It made the finding on the basis that the firm will continue to adhere to strict investment guidelines that support the “strong credit characteristics” of its assets portfolio.
S&P’s report said Temasek’s limited debt supports its investment capabilities, allowing it to mobilise “substantial funds on a timely basis to seize opportunities”. Its affirmation of Temasek’s corporate credit ratings also took into account its view of an “extremely high” likelihood of extraordinary support from the Singapore Government, if necessary………………………………………..Full Article: Source

Moody’s affirms Botswana’s outlook stable

Posted on 15 December 2015 by VRS  |  Email |Print

Moody’s Investors Service has affirmed Botswana’s A2 government bond and issuer ratings with a stable outlook. The sovereign wealth fund, the Pula Fund, had more than $5 billion, or 36.9 per cent of GDP forecast for 2015, at end-September 2015. Moody’s expects that the economic stimulus package the government considers will be limited in size and hence will neither significantly reduce the Pula Funds’s large assets, nor raise Botswana’s government debt-to-GDP ratio.
Low government debt and the large foreign asset positions of the Bank of Botswana (BoB) put the sovereign in a strong net creditor position of about 40% of GDP at the end of 2014. In 2014, the Pula Fund’s foreign assets were twice as high as the government’s outstanding debt………………………………………..Full Article: Source

RAM Ratings reaffirms Qatar’s ratings

Posted on 15 December 2015 by VRS  |  Email |Print

RAM Ratings has reaffirmed Qatar’s respective global- and ASEAN-scale sovereign ratings of gAA3(pi)/stable and seaAAA(pi)/stable. Besides having the lowest fiscal breakeven oil price in the GCC region after Kuwait, Qatar’s huge sovereign wealth – accumulated from past fiscal surpluses – and reserves totalling 172 per cent of GDP underpin its credit strength and should help it weather a period of low oil and gas prices.
As the downtrend in LNG prices lags that of oil, Qatar is still expected to record a current account surplus of 4.6 per cent of GDP in 2015 (2014: 26 per cent of GDP). Although diversification efforts over the long term (in line with the 2030 Qatar National Vision) has strengthened the State’s resilience, depressed oil prices have led to delays and a re-prioritisation of development projects………………………………………..Full Article: Source

Sovereign Wealth Funds Grow Assets in 2015

Posted on 14 December 2015 by VRS  |  Email |Print

In line with the release of the 2015 Preqin Sovereign Wealth Fund Review in April 2015, we found that AUM for sovereign wealth funds globally reached $6.31tn as at March 2015 – increasing by more than $900bn in 18 months. This is despite falling commodity and oil prices, which many of these institutions rely on for funding. Assets therefore grew from continued funding from reserves and governments, as well as from investment returns.
Alternative assets are an increasingly important part of these institutions’ portfolios, particularly as they seek to diversify their portfolios and acquire assets that can generate yield and help meet their long-term objectives. As at December 2015, total assets for sovereign wealth funds that are looking to invest in private equity stands at $6.0tn………………………………………..Full Article: Source

The Sovereign Wealth Fund Discount: Evidence From Public Equity Investments

Posted on 26 November 2015 by VRS  |  Email |Print

By some measures, SWFs have already been extensively researched. Yet extant empirical research offers incomplete evidence about the impact of Sovereign Wealth Fund investments on the value of publicly traded companies.
Studies that examine SWF investments using event-study techniques (Dewenter, Han, and Malatesta 2010; Kotter and Lel 2011) find positive announcement-period returns. Unfortunately, these results offer little insight into the role of SWFs as investors, as corporate finance research consistently documents positive announcement-period abnormal returns for all types of direct stock purchases by institutional investors………………………………………..Full Article: Source

Sovereign Wealth Funds Redemption Risk Overblown?

Posted on 25 November 2015 by VRS  |  Email |Print

The MS analysts begin by highlighting that both media reports and some management commentary have suggested that certain “petrodollar-related” sovereign wealth funds have been withdrawing billions of dollars from asset managers because of growing national deficits and to minimize exposure to volatile equity markets given much lower crude oil prices.
Cyprys et al. argue that these SWF redemption concerns are really overblown given that only 60% of SWF assets are held by oil-reliant economies, and, moreover, current fiscal pressures vary dramatically………………………………………..Full Article: Source

Khazanah Research to help clarify TPPA benefits, pitfalls

Posted on 17 November 2015 by VRS  |  Email |Print

Khazanah Nasional Bhd is among the key outfits helping to analyse various benefits and pitfalls for Malaysians with the nation’s participation in the Trans-Pacific Partnership Agreement (TPPA). “We hope the analyses would show in terms of what the benefits are and in terms of what the costs are and whether the benefits outweigh the costs,” said Khazanah Research Institute managing director Datuk Charon Mokhzani.
The highly publicised 12-country trade agreement has received both praises and criticisms in Malaysia and TPPA member nations, based on details leaked earlier and initial impressions after the full text was made public last week. “It’s a 6,000 page document and it’s very hard for us today to tell you what the overall impact (just yet). To be able to make a proper comment on this is too early. We need time to understand the document.”………………………………………Full Article: Source

Fears over sovereign wealth funds pulling assets overblown, Morgan Stanley says

Posted on 17 November 2015 by VRS  |  Email |Print

Fears that sovereign wealth funds would pull out of equity markets - say, as some countries tried to shore up their public finances in the face of lower oil prices - and the impact that might have on asset managers and banks were “overblown,” analysts at Morgan Stanley found.
Only 60% of SWF’s assets, totalling approximately $7tn (£4.64bn), are held by oil producing nations and the pressures on their state finances vary depending on the economy in question, they argued in a research report sent to clients. An “extreme” bear-case suggested potential earnings risk of 0.1-7.1% (average: 2.1%) if all SWFs redeemed all externally managed assets, the broker said……………………………………….Full Article: Source

SWF assets to decline further due low oil prices -Moody’s

Posted on 16 November 2015 by VRS  |  Email |Print

Sovereign wealth fund (SWF) assets will grow more slowly or even decline as governments are forced to tap funds to finance budget deficits resulting from persistently low oil prices, credit ratings agency Moody’s said on Thursday. The $4.5 trillion SWF industry has grown rapidly over the last decade but with 73 percent of SWF assets funded from oil and gas revenues, countries like Russia, Saudi Arabia and Norway have already begun tapping into their reserves.
These drawdowns have been prompted by a fall of over 50 percent in global oil prices, with Brent crude futures plunging from $115 a barrel in June 2014 to around $45 a barrel today. With the oil supply glut persisting, the situation is not expected to change soon………………………………………..Full Article: Source

Sovereign Wealth Funds Have Buffers Against Oil Shock: Moody’s

Posted on 16 November 2015 by VRS  |  Email |Print

As a November 12th report from Moody’s Investors Service highlights, both the number and the AUM of global sovereign wealth funds (SWFs) have grown rapidly over the last decade and change. Moreover, SWFs are becoming a crucial part of the international financial system, and were an important stabilizing force in the financial crisis a few years ago.
Finally, as Elena H. Duggar and the rest of the Moody’s team note: “SWFs facilitate the intergenerational transfer of proceeds from nonrenewable resources, allow for greater portfolio diversification than traditional central bank reserves, and contribute to exchange rate stability by managing excess inflows. SWFs also increasingly fund investments in infrastructure.”……………………………………….Full Article: Source

SWFs: Buddies or baddies?

Posted on 06 November 2015 by VRS  |  Email |Print

As it turns out, sovereigns don’t always win: many thought Malaysia’s Khazanah Nasional had a done deal when it offered €750 million for Globalvia last summer – only to see Spanish-based Bankia and FCC, current owners of the concessions business, sell the asset to Canada’s OPTrust, the Netherlands’ PGGM and the UK’s USS this week after the pensions matched the fund’s bid.
1MDB, another Malaysian state-backed fund, is divesting assets rather than hunting for them. It is now hoping to get about $3 billion for its energy unit. The institution’s troubles are largely down to gross mismanagement; it doesn’t help that $700 million have mysteriously disappeared from its coffers, with the Prime Minister accused of channelling the money to his personal accounts. Still, it shows that sovereigns sometimes have their own particular issues to deal with………………………………………..Full Article: Source

Sovereign wealth funds face a rainy day

Posted on 30 October 2015 by VRS  |  Email |Print

The 46 countries that have at least one sovereign wealth fund have largely set them up for a rainy day. Now that day has come for most of them. Commodity prices are so depressed that governments need to unseal their piggy banks and with profitable investment opportunities scarce there is little incentive not to. This could end up putting downward pressure on global financial markets.
Of the top 30 sovereign funds, 18 are filled with revenues from oil and gas. The largest of the funds, set up in 1990 to safeguard Norway’s oil wealth for future generations, posted its biggest loss in four years this week. It shed $32 billion in the third quarter, all in the stock market, which accounts for 60 percent of its investments………………………………………..Full Article: Source

Here’s what Temasek Holdings & GIC do with your money

Posted on 23 October 2015 by VRS  |  Email |Print

It’s high time someone talks about the elephant(s) in the room (Singapore) that has been the talk of this election and conspiracy theorists: Temasek Holdings and GIC. Sovereign wealth funds (SWFs) have been accused of having hidden agendas, being state economic weapons. At the same time, they’ve also been hailed as saviors, buoying up banks during the financial crisis when capital markets were frozen.
Singapore isn’t the only nation with a SWF; many other nations (mainly net exporters) that enjoy current account surpluses and hoard reserves have a SWF as well. SWFs manage vast amounts of money, also often seen as the true lender of last resort in its home country. The below table shows the world’s largest SWFs:……………………………………….Full Article: Source

banner
banner
banner
banner
September 2016
M T W T F S S
« Aug    
 1234
567891011
12131415161718
19202122232425
2627282930