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Why Long-Term Investing Can Be Dangerous

Posted on 22 May 2015 by VRS  |  Email |Print

Personally, I agree that, in general, large sovereign funds and pensions should invest for the long-term. There are scores of reasons why and thousands of papers produced by asset managers, think tanks and professors who believe so. Nearly every institutional investor with over US$ 100 billion in assets subscribes to the “long-term investor” philosophy.
Will the Canary Wharf deal be a positive in the long-run for the Qatar Investment Authority (QIA) given the price paid and resources allocated? Incorrect expectations based on a shaky premise can lead to money being stuck in an underperforming asset (this is especially the case with sizable illiquid investments)………………………………………..Full Article: Source

Global state investors shift into property

Posted on 21 May 2015 by VRS  |  Email |Print

Big public sector investors are joining the global property boom with plans to shift significant funds into real estate and infrastructure projects over the next three to five years to boost returns. Central bankers’ forum Omfif surveyed 500 public sector institutions with total assets of $29.7tn, which already hold 9.1 per cent in real estate and infrastructure.
The drive into real estate and infrastructure has been led by sovereign wealth funds, such as Norway’s oil fund, and public pension funds. Among other trends identified by the report was the rise of the Asia-Pacific region as the world’s sovereign wealth fund hub when measured by assets under management. Globally, sovereign funds’ assets grew 5.2 per cent in 2014………………………………………..Full Article: Source

With oil cheap, public pressure grows on Gulf sovereign funds

Posted on 21 May 2015 by VRS  |  Email |Print

Running sovereign wealth funds in the Gulf has become an awkward business in the era of cheap oil, as their managers face growing pressure from politicians and the public to prove they’re investing national reserves wisely.
When oil prices were high, the Gulf funds - which include some of the largest in the world - came under little public scrutiny. Government coffers were awash with energy revenues and the financial futures of the Gulf Arab states seemed secure. But with Brent crude now at little more than half last June’s level, the countries may be entering their toughest fiscal times since the 1990s, and this has changed the political climate………………………………………..Full Article: Source

Negative Rates in Europe, Shifted Sovereign Fund Behavior

Posted on 21 May 2015 by VRS  |  Email |Print

Asian and Middle Eastern sovereign wealth funds and large pension investors have been awarding a slurry of mandates to opportunistic credit managers. For example, in May, the £4.8 billion London Pensions Fund Authority hired Apollo Global Management for a £150 million allocation to target distressed debt, real estate debt, leveraged senior loans and private lending in developed markets.
hina Investment Corporation (CIC) recently moved forward on a deal to invest in WLR Cardinal Mezzanine Fund, a €350 million debt fund, co-managed by private equity firm WL Ross & Co. and Dublin-based Cardinal Capital Group. These public institutional investors have been trying to decrease any unnecessary long-term exposure to the European sovereign debt market………………………………………..Full Article: Source

The sustainable side of oil

Posted on 15 May 2015 by VRS  |  Email |Print

While an abundance of natural resources can handicap an economy, oil-based sovereign wealth funds can turn a finite resource into a sustainable financial tool. “Having large reserves of oil and gas presents an economy with considerable opportunities over the short- and long-term”, read a government-sponsored proposal for a Scottish oil fund. This was a statement that came in the lead-up to last year’s in/out referendum and one that saw the Scottish Government roll out plans to establish two oil funds and make good on any surplus tax receipts derived from North Sea oil and gas.
The first of the two funds would offset any sudden price swings and stabilise what could otherwise prove a potentially volatile revenue stream, according to the Fiscal Commission Working Group. This stabilisation fund, “into which higher than forecast oil and gas revenues are deposited, would minimise North Sea revenue volatility from changes in oil prices”, according to the Scottish Government Finance Secretary John Swinney………………………………..Full Article: Source

Sovereign wealth funds step up their property investments in Asia-Pacific

Posted on 13 May 2015 by VRS  |  Email |Print

Sovereign wealth funds are stepping up their property investments to diversify their focus from listed equity assets. Even though mainland China is an important market for the sovereign funds, they often still prefer developed markets for long-term returns.
“Obviously China is an important market for sovereign wealth funds but many of them, particularly the new entries to this region, would prefer more mature markets like Japan and Australia,” said Ada Choi, senior director at CBRE Research, Asia Pacific. “Hong Kong and Singapore are in the spotlight too but I think that activity will be driven by opportunities to access such prime properties,” said Choi………………………………………..Full Article: Source

Sovereign Wealth Funds Venture into New Territory

Posted on 12 May 2015 by VRS  |  Email |Print

Historically, government bonds have been an asset allocation staple of sovereign wealth funds. Central bank monetary policy is making a significant impact on sovereign debt markets. In the euro zone alone, 26 percent of European government bonds and 54 percent of German Bunds are trading on a negative yield. These unprecedented low yields have pushed SWFs to reassess their weightings and readjust their portfolios.
There has been a global proliferation of SWFs. Roughly half of the funds came into being during the past eight years; three quarters have been in existence since 2000. A further 22 jurisdictions are considering launching their own SWFs………………………………………..Full Article: Source

Sovereign wealth funds increase appetite for longer term investments

Posted on 12 May 2015 by VRS  |  Email |Print

Historically government fixed income has been an asset allocation staple of sovereign wealth funds (SWF). However, these unprecedented, low bond yields have pushed them to reassess their weightings and readjust their portfolios.Patrick Thomson, global head of Sovereigns, JP Morgan Asset Management, looks at the changing asset preferences of SWFs.
Central bank monetary policy across the globe is significantly impacting markets around the world. In the Eurozone alone, more than a quarter (26%) of European government bonds are trading on a negative yield, over half (54%) of Germany Bunds are trading on a negative yield – with some 23% yielding less than the -20 basis points threshold for European Central Bank (ECB) bond buying eligibility……………………………………….Full Article: Source

SWFs, Reshuffling Boards and Adding Overseas Offices

Posted on 07 May 2015 by VRS  |  Email |Print

International Petroleum Investment Corp. (IPIC) acted swiftly to shake off concerns about its corporate governance. The government-backed vehicle reshuffled its board on April 22, with U.A.E. Minister of Energy Suhail Mohammed Faraj al-Mazrouei replacing Khadem al-Qubaisi as the fund’s chief executive. Sheikh Mansour bin Zayed al-Nahyan remains as chairman of IPIC. Former IPIC CEO al-Qubaisi was also omitted from a list of new board members at Dubai-based construction firm Arabtec Holdings — in which IPIC now holds a 36.1 percent stake - and where he had served as chairman.
On April 13, the Financial Times reported allegations that al-Qubaisi used Luxembourg-based shell companies to secure deals with some of IPIC’s holdings. Specifically, the story alleged that he used one of the companies to take out a lease on Spain’s tallest building, Madrid’s Torre Foster and nine months later to sublet it to IPIC-owned Compania Espanola de Petroaleos (CEPSA), of which al-Qubaisi was chairman………………………………………..Full Article: Source

Malaysia’s Khazanah Is Spreading Its Reach Abroad

Posted on 06 May 2015 by VRS  |  Email |Print

The $45 billion sovereign wealth fund, headed by Azman Mokhtar, is stepping up its portfolio investments in Asia and beyond, and helping Malaysia’s major companies go international. Being an Asian sovereign wealth fund with cash to spare has its benefits. Just ask Azman bin-Haji Mokhtar.
A little more than two years ago, Azman, head of Malaysia’s Khazanah Nasional, heard from the fund’s analysts in China that e-commerce giant Alibaba Group Holding was looking for cornerstone investors to put the company on the path to an initial public offering. He didn’t hesitate: Khazanah invested a total of $400 million in two fundraising exercises, for a stake of 0.6 percent in the Chinese company. It participated alongside Temasek Holdings, the sovereign wealth fund of neighboring Singapore………………………………………..Full Article: Source

5 Key Takeaways at SWFI’s Institute Fund Summit Asia in Seoul

Posted on 05 May 2015 by VRS  |  Email |Print

In late April, the Sovereign Wealth Fund Institute (SWFI) held its third Asia summit this time in Seoul, Korea - a vibrant metropolis home to global companies such as Samsung, Hyundai and Lotte. South Korea’s rise to an economic powerhouse is fascinating. In 1957, South Korea and Ghana had nearly the same annual per capital global domestic product. Today, their stories couldn’t be more different.
Walking down the busy streets of Seoul and districts such as the glitzy Gangnam section, Korea has become a model for emerging economies in general, and Asian economies specifically. With prosperity in exports and domestic consumption, Asian companies are expanding market share. Eric Moffett who manages money at T. Rowe Price made the case that Asian companies and their earnings are exposed to rising incomes in parts of Asia………………………………………..Full Article: Source

Biggest Wealth Fund Joins Bond Bears in Bet Europe Rally Fading

Posted on 30 April 2015 by VRS  |  Email |Print

Norway’s $900 billion sovereign wealth fund is joining Janus Capital’s Bill Gross and Jeffrey Gundlach of Doubleline Capital in betting Europe’s historic bond rally is coming to an end.
Yngve Slyngstad, the manager of the Oslo-based fund which on Wednesday reported a record investment return, said he is weighting a 2.5 trillion-krone ($328 billion) bond portfolio to shorter maturities, meaning it will outperform when rates rise. “As long as interest rates are stable, or falling, we will be lagging the broader markets as we have a shorter maturity in the portfolio,” Slyngstad said in an interview………………………………………..Full Article: Source

SWFs Continue Global Hunt for Properties of Varied Stripes

Posted on 29 April 2015 by VRS  |  Email |Print

Sovereign wealth and public pension funds grabbed a series of headlines in 2014 as they bought up expensive properties in developed markets. Prime office properties in so-called gateway cities like London, New York and Paris attracted the lion’s share of sovereign funds’ capital, accounting for $13.8 billion of the $23 billion they spent on global real estate, according to Sovereign Wealth Center data. Of the major business centers, funds favored London, which received $4 billion in investments in 2014.
In the U.S., however, sovereign funds looked beyond New York, the traditional favorite, and targeted other major cities including Boston, Los Angeles, San Francisco and Washington, D.C. In the U.S. capital alone sovereign wealth funds bought four office buildings for a total of $733 million………………………………………..Full Article: Source

QIA Hunts for Hotels

Posted on 28 April 2015 by VRS  |  Email |Print

The Qatar Investment Authority made progress on two big London real estate deals this week. Elsewhere, Singapore’s state-owned asset managers continue to target India and Norway made a big investment in U.S. logistics properties.
It’s been a busy month for the Qatar Investment Authority (QIA). Sovereign Wealth Center research suggests that the fund spent some $2.3 billion on shares in Royal Dutch Shell and BG Group following their merger on April 8. Now QIA has turned to augmenting its real estate portfolio………………………………………..Full Article: Source

Norway’s SWF flexes its muscles

Posted on 23 April 2015 by VRS  |  Email |Print

Norway’s $890bn fund is flexing its muscles in corporate governance matters by revealing it will vote against US power company AES over proxy access. It marks only the second time that the world’s largest sovereign wealth fund has revealed its voting intention ahead of a company’s annual meeting, a tactic that the Norwegian investor is hoping to use more and more in the future writes the FT’s Richard Milne in Oslo.
Proxy access – the ability of minority shareholders to nominate their own board directors – is one of the fund’s main focus areas. It agreed to back two shareholder proposals on proxy access at AES and vote against two management proposals in its voting intention published on Tuesday, two days before the US company’s annual meeting……………………………………..Full Article: Source

Can Sovereign Wealth Funds Learn to Zig When Markets Zag?

Posted on 22 April 2015 by VRS  |  Email |Print

Sovereign Wealth Center’s transaction database (which excludes NBIM’s open-market stock trades that are part of its indexed strategies) backs Meert up. Sovereign wealth funds could be far better at investing countercyclically. An analysis of our investment data from 2005 to the first quarter of 2015 shows that there is a strong correlation between upward swings in the market cycle and sovereign funds’ increased willingness to take on risk — and vice versa.
This trend suggests that although these funds are supposed to invest for the long term and theoretically be indifferent to cyclical market movements. Instead, they tend to follow trends like other investors — piling in as markets rise and selling when they tumble. That’s a surefire recipe for underperformance…………………………………..Full Article: Source

Down Under, SWFs Compete for Hard Assets Amid Rising Prices

Posted on 16 April 2015 by VRS  |  Email |Print

Across Australia, sovereign wealth funds are buying up real estate and infrastructure, hoping to profit from favorable long-term demographic trends. But as prices rise and competition heats up, is the window of opportunity closing? On March 27, voters in New South Wales, Australia, returned right-wing Liberal politician Mike Baird to power as state premier at the head of a coalition government with the countryside-focused National Party.
Baird’s watchword throughout a bruising election campaign was “poles and wires” — he pledged to privatize the state’s electricity grid to raise money for an ambitious spending program to improve roads, schools and hospitals. As the opposition Australian Labor Party was against privatization, the election was considered a referendum on the sell-off — and the voters answered with a resounding yes………………………………………..Full Article: Source

How Sovereign Wealth Funds Can Benefit From Changing Global Trends

Posted on 15 April 2015 by VRS  |  Email |Print

Size, investment horizons, and few liabilities make sovereign wealth funds a unique investor class. In a low-yielding environment, such characteristics mean those funds have discreet advantages. Institutional investors face a new landscape — one shaped by zero-interest-rate policies of many central banks, quantitative easing and low growth. Sovereign wealth funds face the same issues as many other asset owners as they struggle to generate meaningful returns under such conditions.
Sovereign wealth funds differ from other kinds of institutions. State-owned funds typically have a multi-generational investment horizon and do not require an immediate yield as they tend to have strong cash inflows in normal economic circumstances………………………………………..Full Article: Source

Barclays Sees Extension of ‘Blow-Out’ Quarter in Mideast

Posted on 14 April 2015 by VRS  |  Email |Print

Barclays Plc sees local firms and sovereign wealth funds driving Middle East deals after advising on about $15 billion of equity and M&A transactions in the first quarter.
“M&A will continue to be active and there’ll be some interesting outbound deals,” Makram Azar, chairman for the bank in the Middle East and North Africa, said in a telephone interview. “Unlike in the past, sovereign wealth funds from the region will look at more return-generating assets such as for example infrastructure, favoring annual cash returns.”……………………………………….Full Article: Source

Much more sovereign wealth could be headed to NYC real estate

Posted on 13 April 2015 by VRS  |  Email |Print

Sovereign wealth funds made quite a splash in Manhattan real estate in 2014, with north of $2 billion in deals. But that may only be the beginning. A growing number of government funds are looking to increase their investments in real estate worldwide, according to new data by research firm Preqin exclusively reviewed by The Real Deal.
Combined with a marked growth in their balance sheets — since October 2013, sovereign wealth funds have increased their total assets from $5.38 trillion to $6.31 trillion — and New York’s attractiveness as an investment destination, this could mean more money is heading to the Big Apple………………………………………..Full Article: Source

Why Sovereign Wealth Funds Should Not Invest at Home

Posted on 10 April 2015 by VRS  |  Email |Print

A SWF is a type of extra-budgetary fund that operates outside the annual government budget process. SWFs have traditionally been created for a macroeconomic objective (e.g., fiscal stabilization), or to save for future generations. All invest at least partly in foreign assets.
While the idea of using a SWF to invest in domestic assets may resonate with government officials and politicians, there are strong arguments against using SWFs for this purpose. A fund with multiple objectives can undermine public financial management systems, and lead to poor investment decisions, patronage and even corruption………………………………………..Full Article: Source

Do sovereign wealth funds make sense for Africa?

Posted on 09 April 2015 by VRS  |  Email |Print

Sovereign wealth funds seem to be the new must-have accessory for African governments—especially those with freshly discovered oil and gas reserves. In the past three years Angola, Ghana and Nigeria have all set up funds. A string of other countries including Kenya, Liberia, Mozambique and Tanzania are planning to follow suit. But are these funds delivering? And do they make sense in an African context?
These days, everyone wants a sovereign wealth fund (SWF). “The label sovereign wealth fund sounds sexy. ‘Norway has one, Chile has one, Qatar has one, we want one too,’ is what we are hearing a lot” from African leaders, said Andrew Bauer, an economic analyst at the Natural Resource Governance Institute (NRGI), a New York-based NGO………………………………………..Full Article: Source

Are Sovereign Wealth Funds Becoming Guarantors?

Posted on 08 April 2015 by VRS  |  Email |Print

Although sovereign wealth funds only became a major global financial factor 25 years ago, they are rapidly becoming the centerpiece of world monetary liquidity, utilized by 15 global governments fortunate enough to have accumulated excess cash, after meeting all budgetary monetary requirements. It’s estimated that these government-directed wealth centers comprise $7 trillion of the world’s total excess monetary capability of $28 trillion.
Still a leading factor, with close to a trillion dollars in reserve, Norway made this government-directed super-investment vehicle famous as a stockpile for that diminutive (5 million population) Scandinavian nation’s proceeds from North Sea oil and gas………………………………………..Full Article: Source

Is Africa the New Frontier of Sovereign Wealth Funds?

Posted on 07 April 2015 by VRS  |  Email |Print

With oil prices accelerating past $100 per barrel, history suggested that we were on the verge of another boom in sovereign wealth fund creation like the one that characterized the mid-2000s. Now, in 2015, that vision has failed to materialize. Sovereign Wealth Center’s Victoria Barbary suggests that this might not be such a bad thing.
It’s a snowy morning in Helsinki at the end of March. Even the native Finns are wrapped up in goose-down coats to keep out the chill as they walk to work. A coat of white covers the city in a picturesque blanket that dampens the noise of the rush-hour traffic. This isn’t the place you’d expect to find parliamentary delegations from resource-rich countries of sub-Saharan Africa and Central Asia, but walking down the street to the new Finnish parliament annex is a group of African MPs decked out in scarves and hats in the bright colors of their countries’ flags, standing out against the white and gray of their surroundings………………………………………..Full Article: Source

Sovereign wealth funds exerting an ever greater influence

Posted on 01 April 2015 by VRS  |  Email |Print

The collapse in crude oil prices over the past six months has put many countries under fiscal pressure. But some oil-rich producers, such as Norway, the UAE and Kuwait, are in a more comfortable position thanks to longstanding commitments to ring-fence oil revenues into funds to preserve the value of their hydrocarbon resources.
The term ‘sovereign wealth fund’ has only existed for a decade or so, but state vehicles seeking to provide for future generations have been investing for decades, with Kuwait’s fund going back to 1953. The work of these organisations has been pioneering in building and using wealth. “Oil is sold and turned into a financial asset — the idea is to preserve the value of that money in line with inflation, plus some extra,” says Victoria Barbary, director of Institutional Investor’s Sovereign Wealth Centre, a research service………………………………………..Full Article: Source

CIC needs to open up about its past slip-ups

Posted on 01 April 2015 by VRS  |  Email |Print

China’s sovereign wealth fund will be investing more of its resources overseas, the fund’s top executive said Friday at the Boao Forum for Asia. In January, China Investment Corp (CIC) established a subsidiary called CIC Capital for the purpose of making direct investments overseas, said CIC chairman Ding Xuedong. The CIC’s moves usually get a lot of attention due to the company’s relationship with the government.
Founded in September 2007, CIC is a State-owned enterprise responsible for managing part of China’s foreign exchange reserves. Its purpose is to help the government diversify its assets and obtain better returns on China’s growing stash of foreign exchange reserves, which reportedly reached $3.8 trillion in 2013, the most in the world. Prior to setting up the CIC, China had most of its foreign exchange reserves in low-yielding US treasury bonds………………………………………..Full Article: Source

GIC among investors bidding for German group Tank & Rast in $4.11b deal

Posted on 31 March 2015 by VRS  |  Email |Print

German motorway service station group Taoutnk & Rast (Tank & Rast), which has been up for grabs for three months now, has attracted several investor groups including Singapore’s GIC to bid in a deal worth up to 3.5 billion euros ($4.11 billion).
Reuters found out through sources that the investors were preparing to bid for the group, which British buyout group Terra Firma Capital Partners put up for sale in January this year. Tank & Rast could appeal to pension funds and insurers who are focusing on infrastructure investments to generate better returns than from government bonds, the sources said………………………………………..Full Article: Source

Swiss banking model is ‘dead’, says Abu Dhabi finance chief

Posted on 31 March 2015 by VRS  |  Email |Print

Abu Dhabi intends to set itself up as a new hub for wealth management, with the head of its nascent international financial centre declaring Switzerland’s old model of private bank secrecy to be “dead”.
Abu Dhabi Global Markets is an expression of world ambition, intended to elevate the oil-and-gas-rich emirate to the tables of the most influential global institutions, such as the Basel Committee on Banking Supervision and the Group of 20 Nations, using Singapore rather than Switzerland as its model, its chairman told the Financial Times………………………………………..Full Article: Source

China’s CIC to boost foreign direct investment

Posted on 30 March 2015 by VRS  |  Email |Print

China’s giant sovereign wealth fund is stepping up direct investments in long-term global assets, focusing particularly on the US in a vote of confidence in the recovery in the world’s largest economy. Ding Xuedong, chairman of China Investment Corporation, which has about $US220 billion ($284bn) in overseas assets, said he saw diverging economic growth in coming years, with a resurgent US leading the way.
“The US is recovering faster than many have expected, which would make it the No. 1 engine of growth for the global economy,” Mr Ding said on the sidelines of the Boao Forum, an annual gathering of world political and business leaders in the southern Chinese island of Hainan………………………………………..Full Article: Source

In Africa, SWFs Seek to Bridge Infrastructure Gap — And Make Money Too

Posted on 26 March 2015 by VRS  |  Email |Print

Across sub-Saharan Africa, sovereign wealth funds are stepping in to provide capital for big infrastructure projects. There are major risks — but the profits could be huge. The town of Bagamoyo, on Tanzania’s sun-drenched Indian Ocean coast, is a quiet seaport with a history of maritime trade. But it could be about to get a lot busier.
The Tanzanian government has signed an $11 billion deal to transform this historic harbor into Africa’s biggest port. Bagamoyo will become a “special economic zone,” shipping oil, gas and food products from East Africa to emerging economies in the Middle East, Asia and beyond. To secure funding for the project, the Tanzanian government brought in a pair of big foreign investors: Hong Kong-based infrastructure conglomerate China Merchants Holdings International Co. and a sovereign wealth fund, the $34.4 billion State General Reserve Fund of the Sultanate of Oman(SGRF)………………………………………..Full Article: Source

CIC Makes Strategic Investment in Uranium Mining Company

Posted on 25 March 2015 by VRS  |  Email |Print

Currently, China has 27 nuclear reactors under construction. The Asian giant’s nuclear programme possessed 18 GW of nuclear energy capacity in 2014, determined to hit 58 GW by 2020. The demand from China, India and the Middle East are elevating uranium prices, catching up to pre-Fukushima levels.
Perth-based Paladin Energy Ltd, a Uranium explorer and mining company, has agreed to issue US$ 50 million in senior, unsecured convertible bonds to Leader Investment Corporation, a sovereign wealth enterprise (SWE) of the China Investment Corporation (CIC). These convertible bonds issued to the sovereign wealth fund are on the same terms and conditions from the last US$ 100 million convertible bonds that were issued to clients of JP Morgan………………………………………..Full Article: Source

GIC chief laments investors’ short-term perspective

Posted on 23 March 2015 by VRS  |  Email |Print

Asset owners could work together to forge a greater focus on long-term investments, according to the CIO for the Government of Singapore Investment Corporation (GIC). In a new research paper, the sovereign wealth fund’s chief investment officer said he was keen for long-term partnerships with external managers.
However, he expressed concern that other investors’ time horizon did not match GIC’s. Lim Chow Kiat, group CIO for GIC, said that the sovereign investor was limited in the number of truly long-term investments it can make by other investors’ and external managers short-term horizons………………………………………..Full Article: Source

Abu Dhabi’s Invest AD Shifts Funds to Egypt as Stability Returns

Posted on 23 March 2015 by VRS  |  Email |Print

Abu Dhabi asset manager Invest AD, part of Abu Dhabi Investment Council, said it’s boosting investments in Egypt on expectation that the country’s renewed political stability and economic reform will help drive growth. The North African country now accounts for 35 percent of Invest AD’s $50 million Africa equity fund, up from 10 to 15 percent last year, portfolio manager Sherif Salem said in an interview. Nigeria is 5 percent, down from 30 to 35 percent.
“The market is already factoring in quite a positive outcome,” Salem said Sunday in Abu Dhabi. “The trigger was political stability. From an economic standpoint, it’s been reassuring in the past six to eight months, the implementation of economic policies and investments that have been promised.”……………………………………….Full Article: Source

Minerals-Backed SWFs Show Their Mettle as Coal, Copper Prices Plummet

Posted on 20 March 2015 by VRS  |  Email |Print

State-owned investors funded by mineral and metals mining revenue are suffering as prices fall. Fiscal prudence may see them through. As petroleum prices tumble, the world’s attention is focused on those sovereign wealth funds associated with hydrocarbons.
People are paying less heed to government-owned asset pools funded by revenue from nonoil commodities, such as metals, coal and diamonds. Prices for many of these exports have also declined over the past year, though less sharply than oil. Copper prices have fallen by 18 percent since crude started to tank last July, to their lowest value since mid-2009, according to NASDAQ data. Thermal coal has dropped 13 percent over the same period, and is also hovering near six-year lows, according to data provider InvestmentMine………………………………………..Full Article: Source

An answer to Fund-Bank domination

Posted on 19 March 2015 by VRS  |  Email |Print

The Asian Infrastructure Bank is gaining support with European countries signing up. Not surprisingly, US is sulking. Is the tide turning on the Asian Infrastructure Investment Bank, the new development bank being pushed by China to help plug Asia’s multi-trillion-dollar infrastructure financing deficit?
Besides, the signs are that nothing but the highest standards are planned for the bank. For instance the person expected to be in charge, Jin Liqun, is the former chair of the board of supervisors of China Investment Corporation, the Chinese sovereign wealth fund with $200 billion of registered capital, and chair of the International Forum of Sovereign Wealth Funds. He’s also a former vice president of the Asian Development Bank………………………………………..Full Article: Source

Norway fund turns green, exits coal stocks

Posted on 17 March 2015 by VRS  |  Email |Print

The $850-billion Norwegian Government Pension Fund, the world’s largest sovereign wealth fund, has sold off almost all of its holdings of Indian coal and power stocks such as Coal India, Adani Power, GVK Infra and NTPC, Lanco Infratech, CESC and Monnet Ispat, among others, during 2014, citing risks posed to climate, according to the list of sovereign fund’s holdings available with dna said.
The massive fund, which is minority shareholder in more than 9,000 companies across the globe, however has curiously made investment in Reliance Power during the year. The sell-off has not been restricted to India alone as investments in global energy majors, 16 from the US including Alpha Natural Resources, Arch Coal, Consol Energy and Peabody, five Australian coal companies like Coal of Africa, Coalspur Mines and Whitehaven Coal, and also Exxaro of South Africa have been sold off……………………………………….Full Article: Source

Norway Wealth Fund Gains $67 Billion on Emerging Market Bet

Posted on 16 March 2015 by VRS  |  Email |Print

Norway’s sovereign wealth fund rose 544 billion kroner ($67 billion) last year as it broadened its holdings to capture more growth in emerging and frontier markets. The Government Pension Fund Global returned 7.6 percent in 2014, its smallest gain since 2011, the Oslo-based investor said on Friday. The $860 billion fund’s stocks rose 7.9 percent and its bonds advanced 6.9 percent. Real estate investments increased 10.4 percent.
The fund, the world’s biggest, has warned it expects diminished returns amid record low, and even negative, yields in key government bond markets combined with slow growth in developed markets. The fund boosted its holdings in emerging markets to 10.6 percent, adding countries such as Ghana and Mauritius. It also invested in Nigeria’s currency for the first time………………………………………..Full Article: Source

China’s CIC Shifts Wealth Fund Focus to Emerging Markets

Posted on 12 March 2015 by VRS  |  Email |Print

China’s $653 billion sovereign-wealth fund is looking to invest more in emerging markets, according to an infrastructure investing official at China Investment Corp. CIC, which has made several high profile investments in the U.S. and Europe in recent years, is targeting emerging countries where there is less competition, more opportunity to tap growth and a greater need for capital, the executive said.
The sovereign-wealth fund, whose past investments include stakes in London’s Heathrow Airport and New York-based private-equity firm Blackstone Group, plans to build new container ports in Kenya and Tanzania, Mi Tao, a director of infrastructure investing at CIC, said………………………………………..Full Article: Source

In European Infrastructure Boom, SWFs Navigate Minefields

Posted on 12 March 2015 by VRS  |  Email |Print

Across Europe, sovereign wealth funds are financing much-needed infrastructure projects — and realizing big profits. But shifting regulations pose risks. In Spain, a huge infrastructure deal is close to completion. New York investment bank Morgan Stanley has put its Madrid-based natural gas distribution company Madrilena Red de Gas on the market for around euro1.8 billion ($2 billion) — and demand is off the charts.
Three separate investor groups are reportedly battling for the assets, with two sovereign wealth funds in the fray: the Abu Dhabi Investment Authority (ADIA) and Gingko Tree Investment, a unit of China’s State Administration of Foreign Exchange (SAFE)………………………………………..Full Article: Source

Offshore investors spend record $7bn in office purchases

Posted on 12 March 2015 by VRS  |  Email |Print

Offshore investors spent a record $7 billion on Australian commercial office buildings last year, including Chinese companies buying more than $1bn of commercial property for the first time.
He said the fall in the Australian dollar had made real estate more attractive, as the report outlined an expectation of increased activity by Chinese investors, sovereign wealth funds and private equity firms. Chinese firms spent $6.7bn on offshore real estate last year, including $1bn of commercial office space in Australia………………………………………..Full Article: Source

Are Sovereign Wealth Funds Key to Global Economic Recovery?

Posted on 11 March 2015 by VRS  |  Email |Print

Sovereign wealth funds, a multiplicity of aggregate financial world investment groupings and investing opportunities comprise the huge amounts of excess monetary liquidity that have aggregated worldwide. While some are sponsored and/or backed by indigenous governments, they are primarily managed by financial experts, who constantly scan global tangible and intangible objectives, wherever they might exist.
While the U.S., the United Kingdom, and Germany have their large well-known investment institutions like Goldman-Sachs, the Carlyle Group, KKR, and Apollo Management, similar cash-rich nations have relied on these sophisticated sovereign wealth institutions to invest their share of the increasing liquidity that is coalescing in many developing, and even smaller developed world national entities………………………………………..Full Article: Source

Sovereign wealth funds bask in Japan’s rising sun

Posted on 11 March 2015 by VRS  |  Email |Print

Some of the world’s largest institutional investors and sovereign wealth funds are flocking to Japan. In the latest big deal, Chinese sovereign wealth fund China Investment Corporation (CIC) reportedly splashed out about ¥140bn ($1.18bn) on Tokyo’s Meguro Gajoen complex, bought from Mori Trust, in a joint venture with LaSalle Investment Management. Foreign capital pumped ¥1trn ($8.4bn) into Japan’s property market in 2014 – 29% up on the year and the highest level since 2008, according to Real Capital Analytics.
Tokyo has been the main focus of global capital targeting Japan. Buyers included Singapore sovereign wealth fund GIC, which paid $1.7bn for Pacific Century Place in the Marunouchi district of central Tokyo, and Blackstone, which bought a portfolio of apartments in Tokyo from GE Capital for $1.61bn………………………………………..Full Article: Source

China Investment Corporation Restructured Direct Investment Strategy

Posted on 09 March 2015 by VRS  |  Email |Print

For years, the China Investment Corporation (CIC) has accumulated a substantial pool of sovereign wealth capital, but encountered a series of hiccups on getting its direct investment program fully functioning. The Asian sovereign wealth fund placed significant bets in Canadian oil sands, infrastructure, utilities and U.S. financials.
At the start of 2015, CIC formed a unit called CIC Capital whose focus is to go after direct equity investments. When some initial direct investments exhibited tepid performance, it fostered some level of disillusionment with a number of CIC’s government higher ups. The CIC did not give up on direct investing, allocating capital to companies such as Teck Resources, Bumi Resources, Thames Water and Visa………………………………………..Full Article: Source

SWFs Double Down on Hotels

Posted on 09 March 2015 by VRS  |  Email |Print

Sovereign wealth funds’ investments in the hospitality sector have dominated the headlines this week. On Monday, the British press reported that the Abu Dhabi Investment Authority (ADIA) had offered an eye-watering GBP1.6 billion ($2.4 billion) for a trio of landmark London hotels — the Berkeley, Claridge’s and the Connaught — owned by the Maybourne Hotel Group.
At a reported GBP3 million per room, the offer would represent one of the highest per-key prices ever paid. But ADIA will face competition, with other Middle Eastern investors believed to have submitted rival bids. It’s not just British properties that are attracting interest from sovereign wealth funds. The Sovereign Wealth Center has observed a boom in the Japanese hospitality sector in 2015, and hotels in emerging markets are drawing capital from state investors too………………………………………..Full Article: Source

Russian state’s rainy day fund drops as finances squeezed

Posted on 04 March 2015 by VRS  |  Email |Print

The Russian government’s rainy-day fund has shrunk by almost 10 percent in dollar terms in February after the state sought to fill a hole in its budget, where revenues have suffered due to low oil prices. The Reserve Fund is used to support Russian public finances in time of low oil and gas prices and is held in dollars, euros and British pounds. It fell to $77.05 billion from $85.09 billion in January, the finance ministry said Tuesday. The fall in ruble terms was sharper, almost 20 percent, since the ruble gained ground against the dollar and other currencies last month.
The finance ministry said the government had used 500 billion rubles ($8 billion) from the fund to supplement a drop in budget revenue. That followed a separate withdrawal of 50.48 billion rubles in January. Russia’s other main sovereign fund, the National Wealth Fund, rose by $900 million in February to $74.92 billion, the ministry said Tuesday, although its value in ruble terms fell……………………………………….Full Article: Source

Fund cuts US investment in Europe push

Posted on 04 March 2015 by VRS  |  Email |Print

The Kuwait Investment Office (KIO), the London branch office of sovereign wealth fund Kuwait Investment Authority, is gradually reducing its overweight stance on US assets after keeping that position for seven years, its chief executive said.
Osama Al Ayoub, speaking at a business conference in Abu Dhabi, also said the KIO was going overweight on Europe because of the European Central Bank’s (ECB) decision in January to use quantitative easing, a radical form of monetary stimulus. ‘With all this liquidity Mr Draghi (ECB president) is trying to introduce, assets will inflate,’ he said……………………………………….Full Article: Source

How Temasek Has Driven Singapore’s Development

Posted on 04 March 2015 by VRS  |  Email |Print

Last year marked the 40th anniversary of Temasek, one of Singapore’s two sovereign investment funds (SIFs), along with the Government Investment Corporation (GIC). Set up in 1974 as part of the newly independent city-state’s nation- building effort, Temasek has evolved from a sleepy holding company shepherding an initial portfolio of 35 inherited government-linked companies (GLCs) to a long-term, return-seeking investor with both wealth-management and development mandates.
Temasek is still a government holding company that acts as a shareholder on behalf of the Singaporean government. Today it pursues its developmental mandate by buying direct stakes mostly in Singaporean and Asian companies, and then reinvesting its proceeds from asset sales and dividend income into foreign assets, acting like a private equity fund……………………………………….Full Article: Source

Temasek: Inclusion in NIR framework will not affect strategy or dividend policy

Posted on 03 March 2015 by VRS  |  Email |Print

The move to include the projected earnings of Temasek Holdings in the Net Investment Returns (NIR) framework will not impact the investment holding company’s strategy or dividend policy, a spokesperson for Temasek said. Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam announced the inclusion of Temasek’s total expected returns into the NIR framework in his Budget announcement on Feb 23, with the boost to Government coffers needed to bolster increased spending on areas including “critical infrastructure” such as healthcare and public transport.
On Tuesday (Mar 3), in a letter to TODAY’s Voices section, Mr Jeffrey Fang, Associate Director of Strategic and Public Affairs at Temasek, said: “The Net Investment Returns (NIR) framework does not affect Temasek’s approach to investment.”……………………………………….Full Article: Source

No change to Temasek investment strategy despite capital-gains inclusion

Posted on 03 March 2015 by VRS  |  Email |Print

Temasek Holdings said it will not change its strategy of seeking sustainable long-term investment returns, amid suggestions that it should hold more liquid assets and settle for lower returns now that its capital gains are to be included in the Government’s coffers.
Such suggestions for Temasek to take a more conservative investment stance emerged following Finance Minister Tharman Shanmugaratnam’s Budget speech last Monday that the Government is “now ready” to include the company’s total expected returns — including realised and unrealised capital gains — into the Net Investment Returns (NIR) framework………………………………………..Full Article: Source

Angolan sovereign wealth fund eyes hotel investments

Posted on 03 March 2015 by VRS  |  Email |Print

The Angolan sovereign wealth fund, Fundo Soberano de Angola (FSDEA), was officially launched in October 2012 with US$5bn in initial capital, and reportedly receives a $3.5bn injection a year from Angolan oil proceeds.
By the end of 2014, two years after its launch, the fund announced two key investments: $1.1bn in an infrastructure fund (focused on investments in energy, transport and large industrial developments) and $500m into a ‘hospitality’ development fund. Both are focused towards investments across the continent, as well as in Angola………………………………………..Full Article: Source

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