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Oman, Bahrain most vulnerable to oil slump: S&P

Posted on 26 August 2015 by VRS  |  Email |Print

Oman and Bahrain are the most vunerable Gulf countries due to a prolonged slump in the oil prices, according to Standard and Poor’s credit rating agency. The agency attributed this to the low fiscal reserves and lack of economic diversification. Moreover, Oman’s sovereign wealth fund (SWF) has assets of $13 billion, far smaller than other Gulf SWFs.
Ministry of Finance data showed allocations for government wages and salaries amounting to 1.5 billion riyals, including 3.5 million riyals as pension payments for retired ministers, 1.3 billion riyals as allowances (including cost-of-living allocations) and 225 million riyals for other dues in 2014………………………………………..Full Article: Source

The World’s Largest Sovereign Wealth Fund Is About To Become A Seller

Posted on 11 August 2015 by VRS  |  Email |Print

When last we checked in with Norway, the country’s sovereign wealth fund – the largest in the world- was busy going full tin foil hat fringe blog, blasting monetary policy’s iron grip on asset prices and bemoaning the presence of parasitic HFTs and increasingly fragmented markets which conspire to cost institutional investors and those they represent billions.
That was in April. Back in March, we highlighted the tough predicament the country faces in terms of combatting a housing bubble while simultaneously coping with plunging crude prices. We summed up the situation as follows: the country is truly backed into a corner, ease too much and the housing bubble becomes even more unsustainable, don’t ease enough and the oil-dependent economy gets it………………………………………..Full Article: Source

Samruk-Kazyna Launches 35 Big Projects over Last 3 Years

Posted on 11 August 2015 by VRS  |  Email |Print

Kazakhstan’s Samruk-Kazyna National Welfare Fund has launched 35 new industrial investment projects over the last three years, Chief Business Development Director and Member of the Board at the sovereign wealth fund, Berik Beisengaliyev stated at a press briefing in the Central Communications Service, according to Kazinform.
“Over the past three years, Samruk-Kazyna has launched 35 projects for a total of $ 6.9 billion. The fund thereby created about 15,000 temporary and 7,000 permanent jobs. By the end of 2015, it is planned to put into operation an additional 20 projects for $ 6.9 billion, which will create 11,000 temporary and about 6,000 permanent jobs………………………………………..Full Article: Source

Malaysian sovereign wealth fund: Low crude oil prices, weaker ringgit have advantages

Posted on 10 August 2015 by VRS  |  Email |Print

Sovereign wealth fund Khazanah Nasional Bhd said low crude oil prices as well a weaker ringgit has its advantages and disadvantages. “Crude at US$50 (S$69) or below is not good for the country obviously, but there is also a flipside to it. For example, Khazanah companies that are consumers of oil and gas like Tenaga and Malaysia Airlines, they actually benefit in that sense.
“A weaker ringgit is tough in the aspect of exporters but the healthcare and tourism companies will benefit,” said managing director Tan Sri Azman Mokhtar at a briefing after the graduation ceremony of Government-linked Investment Companies (GLICs) and Government-linked Companies (GLCs) under the GLC Transformation Programme………………………………………..Full Article: Source

As Others’ Eyes Roam, a Qatari Sheikh Sticks With Europe

Posted on 07 August 2015 by VRS  |  Email |Print

While most sovereign wealth funds in the Gulf are moving away from European trophy assets, Sheikh Hamad Bin Jassim Bin Jabr Al Thani is sticking to a strategy honed as head of the $250 billion Qatar Investment Authority. The former Qatari prime minister is taking a 10 per cent stake in Spain’s El Corte Ingles, western Europe’s largest department store owner, adding to an agreement last year to inject 1.75 billion euros ($1.94 billion) into Deutsche Bank.
While Sheikh Hamad continues to pursue prestigious European investments, the fund he once headed is heading away from its strategy of buying stakes in European companies such as Barclays and Total. The QIA—and other Gulf funds—are looking increasingly to Asia to capitalise on the region’s growing population and economies, with Qatar saying in December it plans a $10 billion venture with China’s Citic Group………………………………………..Full Article: Source

Why investors are snubbing Malaysian ‘bargains’

Posted on 06 August 2015 by VRS  |  Email |Print

Malaysia’s stocks and currency have tumbled but bargain buyers don’t appear likely to step up any time soon as foreign investors remain leery, analysts said. “Our economists are constructive on Malaysia’s medium-term prospects,” Khoon Goh, senior foreign-exchange strategist at ANZ, said. “Unfortunately, the fundamentals are being overshadowed by domestic political developments that have soured sentiment towards Malaysian assets.”
Amid calls for his resignation, embattled Prime Minister Najib Razak shuffled his cabinet in July, sacking his deputy after he called on Najib to explain the controversy surrounding a Wall Street Journal (WSJ) report that nearly $700 million from heavily indebted quasi-sovereign wealth fund One Malaysia Development Bhd. (1MDB) was deposited into the prime minister’s personal bank accounts………………………………………..Full Article: Source

China’s Sovereign Wealth Fund Seeking Alpha in Silk Road

Posted on 05 August 2015 by VRS  |  Email |Print

China Investment Corporation (CIC), one of China’s four sovereign wealth funds, began overseas direct investment operations last Monday in the One Belt, One Road (OBOR) initiative. Caixin.com reported that CIC Capital, CIC’s overseas direct investment branch started in 2015, may have received $100 billion from a Ministry of Finance (MOF) bond issue in part for this purpose. CIC is seeking to profit from OBOR projects in line with its aim of maintaining a direct investment in a number of countries.
China Investment Corporation’s investment in OBOR may encounter the returns it is looking for, as the sovereign wealth fund appears to have found its footing in a longer-term investment strategy after several years of mixed success. CIC has faced funding issues, with a sporadic source of funding coming from MOF bond issues, as well as major losses in 2008, having invested heavily in Morgan Stanley and Blackstone Group, which suffered greatly during the global financial crisis……………………………………….Full Article: Source

An investment from China’s sovereign wealth fund to Didi Kuaidi bodes well for ridesharing in China

Posted on 05 August 2015 by VRS  |  Email |Print

Ridesharing’s legal future in China remains just as uncertain now as it was two years ago. For every government endorsement of Uber-like services, there’s another statement from officials that hints at a crackdown. But reports of a new investor serves as the best indicator yet that the industry has at least partial support from the government.
Reuters and the WSJ have both reported that China Investment Corporation (CIC), the nation’s sovereign wealth fund, contributed to the recently closed $2 billion round for Didi Kuaidi. The latter is China’s answer to Uber though unlike Uber it uses licensed taxi drivers in addition to regular drivers. The round officially closed last month and raised the startup’s valuation to $3.5 billion………………………………………..Full Article: Source

GIC warns of lower returns on dim global growth outlook

Posted on 31 July 2015 by VRS  |  Email |Print

Singapore’s sovereign wealth fund, one of the world’s biggest, has warned that it expects lower returns over the next five to 10 years because global economic growth and earnings don’t look promising. GIC said ultra-low interest rates had inflated asset prices in developed markets. It said opportunities remained in developed and emerging markets, although it cut its exposure to Europe in the fiscal year to March 2015.
“The fall in interest rates to historic lows in most advanced economies has caused prices of a broad range of asset classes to rise,” said Lim Chow Kiat, GIC’s group president and chief investment officer in the fund’s annual report for the fiscal year that ended in March………………………………………..Full Article: Source

Sovereign wealth funds step up property investments in Asia

Posted on 30 July 2015 by VRS  |  Email |Print

Sovereign wealth funds around the world are pouring money into Asian property to diversify their portfolios as real estate prices surge in major Western cities. The looming U.S. interest rate hike has prompted investors to shift from short-term investments in Asia into the region’s real estate.
The Abu Dhabi Investment Authority is one fund investing in real estate aggressively. It is the world’s second-largest sovereign wealth fund, with operating assets of $679 billion. The fund has reportedly invested more than $50 billion, nearly 10% of its asset holdings, in real estate. In May, it acquired three hotels in Hong Kong for $2.4 billion, the largest real estate investment by a sovereign wealth fund in Asia………………………………………..Full Article: Source

Qatar-Backed Mining Fund Said to Scrap Expansion Plans on Rout

Posted on 30 July 2015 by VRS  |  Email |Print

QKR Corp., a mining fund headed by former JPMorgan Chase & Co. banker Lloyd Pengilly and backed by Qatar’s sovereign wealth fund, has scrapped plans to expand amid a plunge in commodities, according to four people familiar with the situation.
QKR won’t make any new investments, the people said, who asked not to be named because the matter is confidential. The fund, which made its only acquisition in July last year, struggled to gain support from its Qatari backer for further deals following management changes at the country’s $100 billion sovereign wealth fund earlier this year, they said………………………………………..Full Article: Source

The major role of sovereign investors in the global economy: A European perspective

Posted on 30 July 2015 by VRS  |  Email |Print

The global economy has witnessed the emergence of a new set of key actors over the last two decades. Sovereign Wealth Funds (SWFs) and Pension Funds (PFs) – or Sovereign Investors – have become pivotal players in global financial markets thanks to their liquidity, and continue to grow rapidly in number and in size. This group of highly heterogeneous funds has different backgrounds, structures, and missions, but shares an ultimate goal: to preserve capital and maximize the return on investments.
While the economic crisis and subsequent cash constraints in developed economies quickly brought these investors to the forefront, the global economic recovery is intensifying the competition for high returns. The Asset Management industry is expecting a number of fundamental shifts; hence the way many asset managers operate in 2020 will be significantly different from the current model (PwC 2014)………………………………………..Full Article: Source

Qatar spurs glorious future for Goodwood

Posted on 27 July 2015 by VRS  |  Email |Print

As a result of the investment by Qatar’s sovereign wealth fund – the Qatar Investment Authority (QIA) – total prize money has soared from £2 million (Dh11.4m) to £4.5m. One race alone, the Group 1 Qatar Sussex Stakes, will be run for £1m, £700,000 more than last year, and Goodwood says this makes it one of the most significant mile runs in the world.
Now known as the Qatar Goodwood Festival – although the traditional “Glorious Goodwood” title lives on in the organisers’ publicity – the event runs for five days at what the organisers call “the most beautiful racecourse in the world”………………………………………..Full Article: Source

Why Pensions Should Look to Follow Sovereign Wealth Funds

Posted on 23 July 2015 by VRS  |  Email |Print

Long-term institutional investing, as practiced by the world’s leading sovereign wealth funds, enjoys large strategic and tactical advantages. It allows for fundamental themes to fully develop. By taking positions with high potential payoffs despite possibly uncertain timing, the strategy both shapes the future and profits from it.
The long view, coupled with ample resources, can exploit tactical opportunities created by short-term investors under pressure from liquidity demands. More broadly, a long-term strategy stands to benefit from mispricings arising from errors in valuation and elevated risk aversion………………………………………..Full Article: Source

Arabian Gulf sovereign wealth funds pick new plays

Posted on 16 July 2015 by VRS  |  Email |Print

Arabian Gulf sovereign wealth funds (SWFs) may have to increase their transaction volume to generate more returns to make up for the loss of income from lower oil prices and sales, analysts say. The oil price scenario remains unclear and will continue to impact the investments of Gulf funds, which corner nearly 40 per cent of the world’s estimated US$7.2 trillion sovereign wealth fund assets, based on figures from the US-based Sovereign Wealth Fund Institute (SWFI).
Growth in the energy-exporting Gulf is forecast to slow to 3.4 per cent this year, while the region will post a fiscal deficit of 7.9 per cent as oil prices continue to tumble, according to the IMF. Brent is down about 50 per cent since reaching US$115 a barrel in June last year due to an oil supply glut sparked by the US shale oil boom, weaker demand in Europe and Asia and a stronger dollar………………………………………..Full Article: Source

1MDB concerned about ’sloppy’ reports

Posted on 13 July 2015 by VRS  |  Email |Print

1Malaysia Development Bhd (1MDB) has expressed concern about ’sloppy’ reports in The Star today on certain transactions undertaken by the sovereign wealth fund. In describing the local English daily as a “regulated and licensed newspaper” 1MDB said The Star had made several assertions based on the opinions of an unnamed “investigator” regarding a number of transactions made.
1MDB said it was concerned the newspaper is presenting such unsubstantiated opinions as fact in its reporting. “Further, it is a well-known fact that a number of lawful authorities are conducting investigations on 1MDB and no final determination has yet to be made,” it said………………………………………..Full Article: Source

Sovereign wealth funds lead the way in long-term investing

Posted on 10 July 2015 by VRS  |  Email |Print

The advantages enjoyed by sovereign wealth funds have rarely mattered more than now in a capital market environment of low yields, mounting volatility, unexciting global economic growth and sub-par investment returns—nor have they contrasted more sharply with the prevailing transaction-oriented mentality.Patrick Thomson, global head of Sovereigns at JP Morgan Asset Management looks at the changing requirements in the long term space.
Long-term institutional investing, as practiced by the world’s leading sovereign wealth funds, enjoys large strategic advantages and a decisive tactical edge over investing with a shorter time horizon………………………………………..Full Article: Source

Temasek pumps $30 bln into new investments

Posted on 09 July 2015 by VRS  |  Email |Print

In its busiest year since the 2008 financial crisis, Temasek Holdings made $30 billion new investments and stepped up divestments to an all-time high of $19 billion. Temasek did this while global stock markets were still rallying to lock in gains for its financial year ended March 31.
Equities make up the bulk of the Singapore investment company’s portfolio, which had a net value of $266 billion, up $43 billion from the record high a year earlier. One-year shareholder return was 19.2 per cent. About half of its new investments was in growing Asia, and 43 per cent in the mature markets of North America and Europe, where it expects an economic recovery………………………………………..Full Article: Source

Temasek Assets Rise to Record as It Boosts Global Investments

Posted on 08 July 2015 by VRS  |  Email |Print

Temasek Holdings Pte’s assets jumped to an all-time high as the Singapore state-investment firm increased investments in developed markets and broadened those in China as global equity markets gained.
The value of Temasek’s holdings increased 19 percent to a record S$266 billion ($197 billion) in the 12 months to March 31, from S$223 billion in the previous year and more than double a decade ago, the firm said in its annual report Tuesday. It made S$30 billion of new investments, the highest in seven years, and a record S$19 billion of divestments, taking advantage of liquidity-driven market rallies………………………………………..Full Article: Source

Oil Fund of Azerbaijan practically stopped to deposit its funds abroad with exception of 4 Turkish banks

Posted on 07 July 2015 by VRS  |  Email |Print

The State Oil Fund of Azerbaijan (SOFAZ) has practically stopped to deposit its funds abroad with exception of four Turkish banks. According to the SOFAZ financial report for 2014 audited by PwC, last year SOFAZ’s deposits in foreign banks increased from AZN 841.559 million up to AZN 1.019 bn. At the same time, except a deposit in IBA-MOSCOW Bank LLC, all the funds were deposited only in 4 Turkish banks.
The deposit in Türkiye İş Bankası A.S. İstanbul has been increased from AZN 313.009 million up to AZN 355.036 million, the deposit in T.C. Ziraat Bankası A.S. – from AZN 131.158 up to AZN 309.158 million, in Akbank T.A.S, İstanbul - from AZN 109.228 million up to AZN 263.286 million, and in Türkiye Garanti Bankası AS decreased from AZN 209.095 million to AZN 84.243 million………………………………………..Full Article: Source

Singapore’s Temasek surfs worldwide rally as assets reach new high

Posted on 07 July 2015 by VRS  |  Email |Print

Temasek Holdings Pte rode a rally in global equities with a focus on developed markets that probably helped the Singapore state-owned investor’s assets reach a record. Assets at the firm, which releases results this week, may have increased 16 per cent to 18 per cent to as much as S$263 billion (RM740 billion) in the year to March 31, according to estimates by Institutional Investor’s Sovereign Wealth Center and CMC Markets.
That would be the biggest jump in assets in five years and surpass last year’s all-time high of S$223 billion. “They had a great year for their equity investments,” said Nicholas Teo, a Singapore-based strategist at CMC Markets who has been following Temasek’s annual results over the last 10 years. “It shows how aggressive their investment style is compared to other state investors.”……………………………………….Full Article: Source

China Investment Weighs German Gas-Station Operator

Posted on 01 July 2015 by VRS  |  Email |Print

China Investment Corp. is in the running to buy a German highway rest-stop and gasoline-station company that could be valued at about €3 billion, or $3.37 billion, which would be by far the largest Chinese acquisition in Germany, according to people familiar with the matter. The potential bid is the latest sign of the sovereign-wealth fund’s ambitions to boost direct investments in overseas assets.
U.K.-based private-equity firm Terra Firma Capital Partners bought Tank & Rast in 2004 for €1 billion from investors led by Allianz Capital Partners, Apax Partners and Lufthansa. Terra Firma sold half of its stake in the company to Deutsche Bank’s investment arm RREEF. Both are asking suitors to place binding bids by the end of July, people familiar with the transaction said………………………………………..Full Article: Source

Current trends among GCC sovereign wealth funds

Posted on 24 June 2015 by VRS  |  Email |Print

Swelled by oil revenues the region’s sovereign wealth funds remain among the biggest players in the asset management sector despite the recent drop off in oil prices. Mena Fund Manager looks at current trends among the state-owned funds. The sovereign wealth fund (SWF) sector has continued to grow in recent years. With coffers swelled by commodity revenues, the funds have branched out into new asset classes and sought out new investment opportunities.
London lobbying group TheCityUK said SWF assets had grown to $7.1trn during 2014 in its latest survey of the sector. It remains small in comparison with the global mutual, pension and insurance fund sectors, but a significant sector nonetheless………………………………………..Full Article: Source

Norway’s coal exit creates ripples

Posted on 23 June 2015 by VRS  |  Email |Print

While this decision by the fund could inspire other large investors, the fossil fuel divestment movement has already been building up considerable steam. When the world’s largest sovereign wealth fund decides to exit investments in coal, the ripples of the decision can be felt the world over.
Late last month, Norway’s parliament decided that the $900-billion sovereign wealth fund should exit from utilities and miners that get 30 per cent of their business from coal, a move that could trigger as much as $5 billion of divestments………………………………………..Full Article: Source

CFAs thrive in Abu Dhabi as sovereign wealth funds trump Wall Street banks

Posted on 23 June 2015 by VRS  |  Email |Print

Abu Dhabi wealth funds are recruiting and creating more holders of the Chartered Financial Analyst designation than any other employer in the Middle East as they seek greater control over how the emirates’ wealth is managed.
The Abu Dhabi Investment Authority employs about 130 CFAs, a person with knowledge of the matter said, asking not to be identified as the information is private. Abu Dhabi Investment Company has at least 51. That makes them the two largest employers of CFAs in the region, according to rankings provided by the Charlottesville, Virginia-based CFA Institute………………………………………..Full Article: Source

Sovereign Wealth: Moving the market

Posted on 23 June 2015 by VRS  |  Email |Print

Due to their size, sovereign wealth funds are ideally suited to infrastructure investment. And they have been making their mark. Sovereign wealth funds are making greater inroads into infrastructure investment. Data compiled by Preqin and released last month suggests infrastructure is the most popular of all alternative investment routes for SWFs, with 60% preferring infrastructure as demand grows for capital to finance long-term projects.
“As larger SWFs expand their exposure, we can expect (them) to become an even more important source of capital in the infrastructure market,” says Oliver Senchal, senior commercial analyst at Preqin. “While many of these investors acquire assets directly, many SWFs also access infrastructure through private funds.”……………………………………….Full Article: Source

Norwegian government to slow drawdown of sovereign fund

Posted on 22 June 2015 by VRS  |  Email |Print

The Norwegian government is to be more cautious in drawing down the Government Pension Fund Global (GPFG) over concerns the sovereign wealth fund’s size will be hit by market uncertainty.
The Ministry of Finance said the addition to the fiscal rule – which stipulates that transfers from the fund be in line with its expected 4% return target – were necessary so that governments knew how to apply it when the value of the fund fluctuated widely in value………………………………………..Full Article: Source

Oman Wealth Fund Looks Beyond Oil

Posted on 18 June 2015 by VRS  |  Email |Print

Oman, the largest Arab oil producer that’s not an OPEC member, is considering taking equity stakes in logistics, shipping and tourism as its sovereign wealth fund seeks to diversify government income from crude. Oman Investment Fund, which has holdings in Italy to Vietnam and is a shareholder of the Dubai Mercantile Exchange, wants to invest in companies in Oman and abroad that are mainly outside the oil industry, says Fabio Scacciavillani, chief economist at the state-owned fund.
The fund is focusing on logistics, shipping and tourism as those industries are areas in which Oman has an advantage given its location on shipping routes connecting Europe and the Americas to Asia, he said. He didn’t disclose details on future investments………………………………………..Full Article: Source

UAE SWFs major players globally

Posted on 15 June 2015 by VRS  |  Email |Print

According to the Sovereign Wealth Fund (SWF) Institute, GCC-based SWFs have a total of $2.6 trillion (Dh9.54 trillion) in assets — about 37 per cent of total SWF assets worldwide. Close to 80 per cent of SWF assets in GCC states are accounted for by three major players — the Abu Dhabi Investment Authority (Adia) with $773 billion, foreign holdings at the Saudi Arabia Monetary Authority (SAMA) at $757 billion and the Kuwait Investment Authority with $548 billion. By assets, Adia and Sama are the second and third largest SWFs globally.
The UAE has seven large SWFs in total: four in Abu Dhabi, one each in Dubai and Ras Al Khaimah, while the last is a federal fund. By number of funds, this is more than any other country in the GCC and globally, second only to the US which has several smaller-sized state-level SWFs………………………………………..Full Article: Source

1MDB seeks investors for Bandar Malaysia project

Posted on 15 June 2015 by VRS  |  Email |Print

1Malaysia Development Bhd (1MDB) is seeking equity investors for its 495-acre Bandar Malaysia project and will launch a request for proposal (RFP) in the next two weeks. 1MDB president and group executive director Arul Kanda Kandasamy said launch of the RFP for its subsidiary Bandar Malaysia Sdn Bhd comes on the heels of the rationalisation plan presented to Cabinet on May 29.
“Having generated considerable local and global interest, the objective of this RFP process is to select qualified equity investors to partner in the overall development,” its president and group executive director Arul Kanda said in a statement last Friday………………………………………..Full Article: Source

Sovereign wealth funds turn to internal fund management

Posted on 11 June 2015 by VRS  |  Email |Print

Sovereign wealth funds are relying more on in-house expertise to manage their funds in a drive to bring down costs and improve performance in the low-yield environment, according to a report by Invesco Asset Management released on Wednesday. Although falling oil revenues have dampened inflows into sovereign wealth funds (SWFs) in the Middle East and elsewhere, the sector is still a huge pool of capital.
So sovereign funds’ increasing reliance on their own fund teams is significant for investment banks and asset managers, who have courted SWFs in recent years as other areas of finance suffered in the aftermath of the global financial crisis………………………………………..Full Article: Source

Paul Singer: Big Trouble Ahead For SWFs

Posted on 11 June 2015 by VRS  |  Email |Print

Sovereign wealth funds represent money owned by nations and invested in securities and other assets located generally outside those nations. With trillions of dollars of assets, they have emerged as significant investors in a relatively short period of time. Their appetite for variety in investing has also grown, and now they are among the largest investors in Hedge Funds and private equity funds, in addition to their direct ownership of securities, real estate and other assets.
Even sovereign wealth funds that are unrelated to oil and gas money could be subject to shifting directions in any future crisis-driven market environment, which could cause sudden disruptive capital flows. How the political leaders in these countries will act in a period of market stress is very uncertain, but the potential volatility from such entities does not really lend itself to confident modeling………………………………………..Full Article: Source

Sovereign Wealth Funds’ Picky Behavior in Emerging Markets

Posted on 11 June 2015 by VRS  |  Email |Print

Sovereign funds like the Abu Dhabi Investment Authority (ADIA) and Norway’s Government Pension Fund Global (GPFG) have maintained a strong belief of getting more exposure to emerging markets. This ongoing migration of trying to identify the “right” emerging markets has been challenging. Brazil, once a hot market for sovereign wealth activity, has suffered negative returns in its equity markets.
The MSCI Brazil index for 2014 returned -14.04%, 2013 fared worse at -16.04%. Developing markets like Brazil, sovereign wealth funds will be highly selective when deploying capital. However, certain emerging markets are faring better………………………………………..Full Article: Source

SWFs show growing interest in emerging market infrastructure

Posted on 09 June 2015 by VRS  |  Email |Print

Sovereign funds are increasingly showing an interest in emerging market infrastructure, with an overweight to the specific asset class when compared with overall regional exposure. According to a survey of 50 sovereign wealth funds (SWFs) conducted by Invesco, the asset owners – worth more than $7trn (€6.3trn) – are showing an “affinity” for emerging markets, while their exposure to developed market property is also higher than their overall exposure to the same regions.
The asset manager’s third annual Global Sovereign Asset Management Study found that many of the risks associated with investing in emerging markets – such as corruption, regulatory risk and inadequate legal protection – fell away when investing in infrastructure………………………………………..Full Article: Source

Sovereign funds extend move into infrastructure

Posted on 09 June 2015 by VRS  |  Email |Print

The sharp slide in oil prices and low yields on traditional investments has seen sovereign wealth funds keep increasing their exposure to alternative investments like infrastructure and take on a more direct asset management role, according to a new survey. Invesco’s 2015 Global Sovereign Asset Management Study also found the low oil price was having a bigger impact on flows into North American funds than on those in the Middle East, which are large enough to weather the short term volatility.
“In the Middle East the funds are well established, larger and many were caught out during the financial crisis and so have put in place more governance and risk management policies, including allowing for oil price to fluctuate,” said Nick Tolchard, chair of Invesco’s Global Sovereign Group and head of Invesco Middle East………………………………………..Full Article: Source

SWFs Find Real Assets Edge in Peer Networks

Posted on 09 June 2015 by VRS  |  Email |Print

Working with fellow institutional investors is key to successful deal making—and it is a trend on the rise, according to research from Invesco. In its third annual survey of sovereign wealth funds (SWFs), the asset manager found working alongside peers significantly eased major challenges including sourcing deals, cost, and gaining board approval.
“The trend in sovereign collaboration was observed in our 2014 findings,” said Nick Tolchard, chair of Invesco’s Global Sovereign Group and head of Invesco Middle East. “However in 2015 this collaboration appears to be taken further by certain sovereigns who are developing infrastructure propositions specifically to target other sovereigns.”……………………………………….Full Article: Source

Oil Price Drop Hitting Sovereign Funds: Invesco Study

Posted on 09 June 2015 by VRS  |  Email |Print

A study released Monday by Invesco shows that North American sovereign wealth funds have been hardest hit by the steep drop in energy prices. While sovereign funds in the U.S. and Canada were set up thanks to state surpluses in commodity-rich regions, “the timing of the fall in the oil price has been particularly challenging for state governments” in North America, the report says.
In fact, 80% of North American sovereign investors expect funding to be reduced vs. 42% for oil-funded sovereigns in the rest of the world. Still, North American sovereigns indicate that they are confident their assets are protected from the government. In contract, 67% of sovereigns in countries outside North America with a high dependency on oil expect withdrawals if oil prices remain below U.S. $40 per barrel for two years, according to the research. (Oil traded near $63 on Monday.)……………………………………….Full Article: Source

Lower oil price erodes sovereign wealth funds

Posted on 08 June 2015 by VRS  |  Email |Print

Sovereign wealth funds had their best ever year in 2014 in terms of asset increases, but the falling oil price is expected to slow the future growth of these funds substantially. The assets held by sovereign wealth funds, created to safeguard money for state expenses, increased by a record $1tn in 2014, taking total assets to a high of $7.1tn.
But with the growth of sovereign wealth funds tied closely to the price of oil — 60 per cent of their assets originate from commodity exports — asset growth is predicted to slow in 2015, according to figures from TheCityUK, the financial lobbying group. Assets of sovereign wealth funds grew by 12 per cent on average in the previous five years, but the lobby group predicted asset growth would decelerate to just 4 per cent in 2015………………………………………..Full Article: Source

Middle Eastern sovereign wealth funds fear inflow decline

Posted on 08 June 2015 by VRS  |  Email |Print

More than a third of Middle Eastern sovereign wealth funds expect new funding to decrease as the region adjusts to a period of lower oil prices, research suggests. Invesco’s 2015 global sovereign asset management survey reveals that 38 per cent of Middle Eastern sovereign funds expect such funding to decrease; 31 per cent expect it to stay the same; and 31 per cent see it increasing.
After years of ever-increasing allocations, regional fund managers are adjusting to a low-oil environment that may persist for several years. But the research also highlights the positive outlook from most regional funds, whose governments are seeking long-term returns for future generations or domestic development………………………………………..Full Article: Source

Lamphier: Norway offers few lessons for Alberta

Posted on 08 June 2015 by VRS  |  Email |Print

It’s a seductive fantasy. And since I rarely have one of those when I’m churning out a business column, I’d like a private moment to enjoy it, please. There, that’s very nice. Thank you. Thank you so much. The fantasy? Instead of drowning in deficits, Alberta could be rich. Just like Norway. If that’s not alluring to you, I don’t know what is.
By comparison, the Alberta Heritage Savings Trust Fund is worth just over $17 billion. If you do the math, that makes Norway’s fund about 60 times bigger than Alberta’s rainy-day fund. The implied lesson: Norway has wisely saved its energy riches for the benefit of current and future generations, while Alberta has stupidly squandered its treasure trove, through mismanagement and reckless overspending………………………………………..Full Article: Source

Sovereign Wealth Funds: The Next 10 Years

Posted on 03 June 2015 by VRS  |  Email |Print

Ten years ago, I penned an article (see reprinted text here) in which I examined the phenomenon of large and increasingly active government-owned investment funds. While many of them had existed for decades, there was literally nothing available in the academic or practitioner literature on this phenomenon – not even an agreed term! So after some deliberation, I chose to call them “Sovereign Wealth Funds”.
The timing of my article was opportune, in that the pace of activity in this particular segment was picking up dramatically, and the new name – and especially its 3-letter acronym SWF – seemed to fill a need: new funds were being set up all over the world, assets under management were growing fast, and increasingly the role these institutions were playing in markets was being studied and discussed by policymakers, academics and market practitioners alike………………………………………..Full Article: Source

Abu Dhabi Wealth Fund Changing Tack Amid Lower Oil Prices

Posted on 03 June 2015 by VRS  |  Email |Print

The Abu Dhabi Investment Authority, a sovereign-wealth fund with assets estimated at more than $700 billion, is relying less on external money managers and handling more of its investments in-house—a trend gaining traction at some of the largest managers of national wealth from Norway to Singapore.
Funded by excess revenue from the government of Abu Dhabi, a major Persian Gulf oil producer, ADIA was managing 35% of its money in-house in 2014, compared with 25% in the previous year, according to an annual review released Tuesday. Investors watch ADIA’s allocations and money-management strategies carefully because of the effect a shift by a fund its size could potentially have on asset prices………………………………………..Full Article: Source

Bahrain Sovereign Fund Plans to Beat 2014 Foreign Deal Flow

Posted on 28 May 2015 by VRS  |  Email |Print

Bahrain’s sovereign wealth fund intends to complete more acquisitions this year than in 2014 as it diversifies its international holdings and pursues a goal of doubling in size. Bahrain Mumtalakat Holding Co. completed four acquisitions in 2014, Chief Executive Officer Mahmood Al Kooheji said Wednesday in a telephone interview from Manama.
The fund has already made two acquisitions this year and expects to announce at least two more before the end of 2015, he said. Mumtalakat will continue to focus on co-investing with other firms to expand its $11.1 billion of assets in the next seven years, Kooheji said…………………………………Full Article: Source

Public Pressure Grows On Gulf Countries Sovereign Wealth Funds

Posted on 26 May 2015 by VRS  |  Email |Print

With most of the funds disclosing little information, lawmakers in some countries are looking for poor performance or even wrongdoing. Running sovereign wealth funds in the Gulf has become an awkward business in the era of cheap Crude Oil, as their managers face growing pressure from politicians and the public to prove they’re investing national reserves wisely.
When Crude Oil prices were high, the Gulf funds, some of the largest in the world came under little public scrutiny. Government coffers were full of energy revenues and the financial futures of the Gulf Arab states seemed secure. But with Brent Crude Oil now at little more then 50% last June’s level, the countries may be entering their toughest fiscal times since the 1990’s, and this has changed the political climate………………………………………..Full Article: Source

Libya power struggle threatens the fund’s Goldman, SocGen suits

Posted on 25 May 2015 by VRS  |  Email |Print

A fight for control of Libya’s $60bn sovereign wealth fund threatens to derail its multibillion dollar lawsuits against Goldman Sachs Group Inc and Societe Generale SA. Since the Libyan Investment Authority’s London law firm quit in April, two competing factions have claimed control, hiring separate lawyers and public relations firms.
There is a “state of chaos” in the litigation, lawyer Andrew Hunter told a London judge on Friday. He represents a potential witness in the Societe Generale case who says confidential files have been mishandled. “It hasn’t been possible to get consent from the LIA” over the documents, Hunter said, “because there is no one at the LIA to get consent from.”……………………………………….Full Article: Source

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

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