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Investment pact to attract UAE’s sovereign wealth funds to India

Posted on 12 February 2016 by VRS  |  Email |Print

India and the United Arab Emirates (UAE) on Thursday signed a clutch of pacts to boost their strategic and economic ties, including one on concluding a mechanism to allow UAE institutional investors to put money into India’s cash-starved infrastructure and another for rupee-dirham currency swaps.
The investment pact is aimed at attracting the UAE’s sovereign wealth funds into the infrastructure sector. The UAE controls the second largest sovereign wealth fund in the world—the Abu Dhabi Investment Authority with around $800 billion under its management………………………………………..Full Article: Source

Oil prices & the impact on Sovereign Wealth Funds Libya as a case

Posted on 12 February 2016 by VRS  |  Email |Print

The drop in oil prices in the last 12 months has taken markets and investors by surprise. State institutions such as Sovereign Wealth Funds (SWF) have been affected and state budgets have suffered. SWF will grow slowly and in many cases will see some of their assets declining in value or being liquidated to help with government budget deficits. State foreign exchange reserves will be affected as well.
There are over 77 SWFs in existence with total assets of over $7.1 trillion dollars, of which $4 trillion are oil and gas related funds. By the end of 2015 more than 56 percent of the assets of SWFs originated from the sale of oil and gas related products. These funds account for anywhere from 5-10% of total money invested in global markets………………………………………..Full Article: Source

Are Sovereign Wealth Funds to Blame for Bank Stock Drop? (Video)

Posted on 12 February 2016 by VRS  |  Email |Print

Gabriela Santos, JPMorgan Asset Management strategist, discusses the selloff in U.S. stocks with Bloomberg’s Alix Steel, Joe Weisenthal and Scarlet Fu on “What’d You Miss?”.………………………………………Full Article: Source

Sovereign funds’ selling could hit $700 billion of European stocks

Posted on 11 February 2016 by VRS  |  Email |Print

Up to $700 billion (481.70 billion pounds) of European stocks, including major banks, could be in the firing line as the slump in oil prompts some producer countries’ sovereign wealth funds to offload investments.
Fund managers and investors say recent sharp selloffs in global markets and especially European stocks may have been exacerbated by national rainy-day funds selling parts of their equity portfolios to ease squeezed public finances. That might also help explain why European bank stocks have lost nearly a quarter of their value since the start of the year, a $240 billion wipe-out more brutal than at the start of the financial crisis in 2008………………………………………..Full Article: Source

Sovereign wealth funds playing a leading role

Posted on 10 February 2016 by VRS  |  Email |Print

The Omani fund has played an important role with the Oman investment arm, Oman Oil, taking equity in the energy sector and other industries to diversify our economy. A SWF is an entity or fund that is state owned and can be considered as a source of surplus cash received from energy receipts, balance of payments, governmental payments, fiscal surplus, foreign currency operations and proceeds of privatisation.
Our key focus today is the rise SWF from energy receipts and this holds true to energy resourced countries. Oil and gas has been instrumental in increasing the SWF purse and will be discussed later on. In terms of classification, SWF can be a stabilisation fund, saving / future generation fund, pension reserve fund and strategic development fund………………………………………..Full Article: Source

Norway’s sovereign wealth fund asked miners to consider coal demergers

Posted on 08 February 2016 by VRS  |  Email |Print

Norway’s influential sovereign wealth fund asked mining companies in its investment sphere to consider spinning out their coal assets in 2015.The fund, which is a top five shareholder in BHP Billiton, made the request just months before BHP spun out South32.
The coal push was revealed in the fund’s 2015 annual report. It also shows the fund divested from 73 companies in 2015 for ethical and governance reasons. The fund has made headlines in recent years for its increasingly strict stance against investing in fossil fuels………………………………………..Full Article: Source

Falling commodity prices should not weaken SWF drive

Posted on 04 February 2016 by VRS  |  Email |Print

The continuous fall in oil and commodity prices has given shivers to most of Africa’s policy makers in terms of revenue collections and this has led many to question the need of a Sovereign Wealth Funds (SWF) when revenues are low.
The SWF case has long been anchored on the fact that African countries in the past decade had been receiving significant income flows from commodities and oil exports making the case for them to create a fund to save this surplus for future crisis situations, but since 2014 the oil and commodity prices have been falling which has reversed the gains witnessed earlier on………………………………………..Full Article: Source

Abu Dhabi to shift $27B out of sovereign wealth fund

Posted on 04 February 2016 by VRS  |  Email |Print

Abu Dhabi, facing huge budget deficits, will likely transfer as much as $27 billion out of its sovereign wealth fund – the Abu Dhabi Investment Authority – into the government treasury, according to a report by Fitch Ratings.
ADIA, the largest sovereign wealth fund in the Middle East, has over $850 million in New York City real estate holdings. The emirate has taken major hits to its government revenues as oil prices have tanked over the past year, along with other major oil producers such as Russia and Saudi Arabia………………………………………..Full Article: Source

Will There Be Another Sovereign Wealth Selloff Wave?

Posted on 03 February 2016 by VRS  |  Email |Print

Macroeconomists, asset manager CEOs, market pundits and media commentators expressed concern about wealth funds and their current impact on global equity markets. However, the selling by commodity-based funds, specifically in the wealthy GCC region, started in the midst of 2015. Funds such as Mubadala Development Co and the Qatar Investment Authority (QIA) were looking to sell off non-core assets to shore up cash and improve profits.
For example, the QIA put Miramax on the selling block, while lowering its equity ownership in French builder Vinci. It is fair to say not all commodity-based sovereign funds are in sell mode. Countries with commodity-based wealth funds which demonstrate well-diversified economies, or have smaller populations, may be in a better fiscal position in a world with low oil prices………………………………………..Full Article: Source

Sovereign wealth funds drive turbulent trading

Posted on 02 February 2016 by VRS  |  Email |Print

Asset managers have blamed outflows from sovereign wealth funds for one of the worst starts to the year for markets. The collapse in the price of oil resulted in state-backed investment vehicles becoming “forced sellers”. The year began with a sharp drop in equity markets. UK and US stocks fell almost 10 per cent in the first few weeks of 2016 and emerging markets were hit even harder.
Philippe Ferreira, a director at Lyxor Asset Management, the €116bn fund house, said sovereign wealth funds have been driving the turbulent trading conditions. “We know the sovereign wealth funds are under pressure to sell and that is contributing to the market pressure we are seeing,” he said. “Sovereign wealth funds have become forced sellers,” added Guy Monson, chief investment officer of Sarasin & Partners, a UK boutique investment manager………………………………………..Full Article: Source

Sovereign wealth funds sell stocks

Posted on 02 February 2016 by VRS  |  Email |Print

With tax revenues plunging in oil-producing countries, some asset managers are putting part of the blame for January’s stock selloff at the foot of sovereign wealth funds - forced to sell equities to make up government budget shortfalls.
The FT reports the Saudi Arabian Monetary Agency as pulling $70B from external managers last year, and Kazakhstan as also making asset sales. SWFs, of course, own plenty of property and P-E, but when money is needed quickly it’s stocks that are easiest to unload………………………………………..Full Article: Source

Norway’s wealth fund may invest in emerging economies

Posted on 01 February 2016 by VRS  |  Email |Print

Norway’s lawmakers are expected to grant the country’s $800 billion sovereign wealth fund a broader investment brief to better spread risk, the leader of the parliamentary finance committee said.
The central bank, which manages the fund, last month recommended it should be allowed to invest in unlisted infrastructure projects and put a higher share of its assets into real estate, changes representing the biggest shift in strategy since it was permitted to buy property in 2010………………………………………..Full Article: Source

Arabian Gulf funds find Europe’s finest hotels still attractive as ever

Posted on 01 February 2016 by VRS  |  Email |Print

Despite the tumbling prices of oil, sovereign wealth funds from the UAE, Qatar and Kuwait are continuing to pour billions of dirhams’ worth of investment into some of Europe’s finest ­hotels. About US$5.2 billion of cash from Middle East investors has found its way into hotels in the United Kingdom and mainland Europe over the last 24 months, according to the property broker CBRE.
Last year alone, Middle East buyers spent three times as much on European hotels as they did at the height of the previous global property boom in 2007. The big-ticket buying spree from GCC investors includes three of London’s highest-profile hotels – Claridge’s, the Berkeley and the Connaught, which were bought in April last year by part of Qatar’s sovereign wealth fund………………………………………..Full Article: Source

GCC Economic Council for managing sovereign funds

Posted on 01 February 2016 by VRS  |  Email |Print

Many questions have been raised about the proper way to overcome the current economic crisis caused by the oil price decline in the global market. Each country in the GCC is presenting a solution that appears suitable, amid the absence of a unified strategy to help the organization as a whole, not only to surpass the current period but also to ensure not to get trapped in it in the future.
The GCC countries are known to own vast wealth in the form of sovereign funds — estimated at 45 percent of the total sovereign fund in the world, with a capital of about $2 trillion. Each of these countries works individually, so it is easy to entice one side and blackmail the other. This has been the practice for decades………………………………………..Full Article: Source

Oil prices & the impact on Sovereign Wealth Funds - Libya as a case

Posted on 01 February 2016 by VRS  |  Email |Print

The drop in oil prices in the last 12 months has taken markets and investors by surprise. State institutions such as Sovereign Wealth Funds (SWF) have been affected and state budgets have suffered. SWF will grow slowly and in many cases will see some of their assets declining in value or being liquidated to help with government budget deficits. State foreign exchange reserves will be affected as well.
There are over 77 SWF’s in existence with total assets of over $7.1 Trillion dollars, of which $4 trillion are oil and gas related funds. By the end of 2015 more than 56 percent of the assets of SWFs originated from the sale of oil and gas related products. These funds account for anywhere from 5-10% of total money invested in global markets………………………………………..Full Article: Source

Norway’s oil wealth is an enviable nest egg in hard times

Posted on 29 January 2016 by VRS  |  Email |Print

When times get tough, it never hurts to have €700bn stashed away like Norway does in the world’s biggest sovereign wealth fund, to cushion the blow of plunging oil prices. Oslo has prudently tucked away most of its oil money since the 1990s in order to be able to finance its generous welfare state indefinitely.
Invested in stocks, bonds and real estate, the fund is now worth about 6.96-trillion kroner (€734bn), equivalent to about six annual budgets or more than €137,000 for each of the country’s 5.2-million inhabitants………………………………………..Full Article: Source

Sovereign Funds Vs. Asset Managers: The Big Picture

Posted on 29 January 2016 by VRS  |  Email |Print

A number of asset managers who focus on institutional investors such as commodity-based sovereign wealth funds have been ravaged with redemptions. The rapid descent of oil prices flummoxed wealth fund chiefs. In response to the oil glut, the money management spigot for investment managers running listed equity strategies has slowed.
Furthermore, Middle Eastern sovereign funds have been dumping some hedge funds (some shuttered operations), while Canadian asset giants shift more focus toward private credit, real estate and infrastructure investments. However, for some cash-rich sovereign wealth funds like the Abu Dhabi Investment Authority (ADIA), the sustained low price of oil has a negligible effect on their real estate investment activities………………………………………..Full Article: Source

‘Much to worry about’, says Future Fund boss

Posted on 28 January 2016 by VRS  |  Email |Print

Addressing media at a portfolio update to 31 December 2015, Future Fund chairman Peter Costello said returns are likely to be harder to come by in the immediate future. The Future Fund, which like all sovereign wealth funds around the world pays no tax, returned a healthy 8.4 per cent throughout 2015.
However, the return for the last six months of the year was only 1.0 per cent. Mr Costello put the difficulties facing the Future Fund down to the phenomenon of central banks “pumping lots of money at very low interest rates” into the global economy………………………………………..Full Article: Source

Norway’s oil wealth, an enviable nest egg in hard times

Posted on 28 January 2016 by VRS  |  Email |Print

When times get tough, it never hurts to have 700 billion euros stashed away like Norway does in the world’s biggest sovereign wealth fund to cushion the blow of plunging oil prices. Oslo has prudently tucked away most of its oil money since the 1990s in order to be able to finance its generous welfare state indefinitely.
Invested in stocks, bonds and real estate, the fund is now worth around 6.96 trillion kroner (S$1.13 trillion), equivalent to around six annual budgets or more than 137,000 euros for each of the country’s 5.2 million inhabitants………………………………………..Full Article: Source

Future Fund shifts to cash as global investment risks rise

Posted on 27 January 2016 by VRS  |  Email |Print

Australia’s sovereign wealth fund has warned that the unwinding of economic stimulus and record low interest rates is likely to create more instability on global financial markets. The Future Fund today reported growth of 8.4 per cent for the recently ended calendar year, taking its value to $118.4 billion, but chairman Peter Costello outlined a continued cautious focus given the recent volatility.
“The run-up in asset prices has been driven by record low interest rates and … the withdrawal of monetary stimulus would see prospective returns lower than in recent years,” former Australian treasurer Mr Costello told reporters………………………………………..Full Article: Source

Energy-rich sovereign wealth funds pull money from firms

Posted on 26 January 2016 by VRS  |  Email |Print

Global money managers are losing some of their most reliable client assets as the stubbornly low oil price continues to take a toll on the world’s largest sovereign wealth funds. Sources with knowledge of sovereign wealth funds and their assets said the price of oil — which hovered around $30 a barrel as Pensions & Investments went to press — will affect funds in different ways because of their varied objectives.
Development funds, for example, are unlikely to redeem assets, sources said, while stabilization funds that are designed to cover fiscal deficits may be tapped by governments to plug the gap………………………………………..Full Article: Source

FSI Investmenti at cutting edge of Arab-Italian ventures

Posted on 25 January 2016 by VRS  |  Email |Print

The Fondo Strategico Italiano (FSI) achieves its aims via direct investments and systemic joint ventures that together forge the fundamental strategy of the semi-official sovereign wealth fund. The FSI is creating close relationships with the Arab world, in particular with Kuwait and other emirates in the Gulf Cooperation Council.
The most important operation FSI brokered recently is with the Kuwait Investment Authority (KIA). The two companies announced, at the beginning of 2014, an agreement negotiated under the government of former Italian Prime Minister Enrico Letta and then officially approved in July 2014………………………………………..Full Article: Source

Norway wealth fund to sit out selloff

Posted on 22 January 2016 by VRS  |  Email |Print

The world’s biggest wealth fund won’t be joining its counterparts in a selloff that’s hurting already depressed markets. In fact, officials who supervise the $780 billion fund haven’t even discussed the possibility of shifting strategy, according to Egil Matsen, who this week started as the new deputy central bank governor in charge of oversight of the investor.
“There’s no indication that we need to sell assets now, not at all,” Matsen said in an interview in Oslo Thursday. “The governance structure around our sovereign wealth fund is actually designed to live through such periods.”……………………………………….Full Article: Source

Oil price collapse heightens concern over sovereign wealth funds

Posted on 21 January 2016 by VRS  |  Email |Print

One reason tumbling oil prices have hit global market sentiment so badly is because investors are worried about the fiscal damage being wrought upon energy-producing nations. They need to raise money, the reasoning goes. And so, as Capital Economics notes: “The collapse in oil prices has prompted concerns that many sovereign wealth funds will be forced to liquidate their vast holdings of financial assets, putting further pressure on market prices.”
The assets of SWFs have more than doubled since the end of 2007, from about $3.5tn to $7.2tn, the result of oil prices increasing earlier in that period. It is estimated that by the end of last year more than 56 per cent of the assets of SWFs originated from the export of oil and gas-related products, says CapEco………………………………………..Full Article: Source

“Norway will become poorer,” OECD says

Posted on 21 January 2016 by VRS  |  Email |Print

Recent economic developments, policies and prospects, as well as an insight in higher education, agriculture, and rural policy are examined in the report. OECD Director Bob Ford talked about the Sovereign Wealth Fund in his speech at the presentation of the report.
He highlighted that the SWF has acted as a buffer against worse economic times and a falling oil price, reported NRK. “But the oil price drop means that Norway will become poorer, and we will have structural budget challenges in the years ahead,” he said. It is also estimated that the value of Norway’s oil wealth would be reduced from NOK 4,200bn to NOK 2,500bn (about USD 282.57bn) if: prices per barrel were NOK 100 (some USD 11.3) lower than thought, and gas prices were reduced accordingly, percentage-wise………………………………………..Full Article: Source

Brace for further economic ‘shocks’: Future Fund

Posted on 20 January 2016 by VRS  |  Email |Print

Australia’s sovereign wealth fund, Future Fund, has warned of further imbalances within the global economy and below average returns. Future Fund managing director, David Neal, said although the global economy has recovered since the global financial crisis, inequities across economies remain.
“While the global economy has continued to heal following the 2008-09 financial crisis, significant imbalances persist and the potential for missteps and shocks remain,” said Mr Neal. “We are continuing our disciplined investment approach while striving to be nimble and innovative in identifying and accessing opportunities.”……………………………………….Full Article: Source

Malay fund looks abroad

Posted on 19 January 2016 by VRS  |  Email |Print

Malaysia’s sovereign wealth fund Khazanah Nasional Bhd will be looking at expanding its presence overseas amid expectations that domestic and global economies will remain volatile in 2016. Managing director Tan Sri Azman Mokhtar said the fund’s international investments had been giving it a higher rate of return compared with returns from Khazanah’s legacy assets.
Overall, Khazanah’s investments, which includes legacy assets, have given it a return of 10.7 per cent in 2015. But if separated, its international investments have given it about 18 per cent per annum………………………………………..Full Article: Source

Khazanah says overseas investments give better returns

Posted on 14 January 2016 by VRS  |  Email |Print

Malaysia’s sovereign wealth fund Khazanah Nasional Bhd will be looking at expanding its presence overseas amid expectations that domestic and global economies will remain volatile in 2016.
Managing director Tan Sri Azman Mokhtar said the fund’s international investments had been giving it a higher rate of return compared with returns from Khazanah’s legacy assets. Overall, Khazanah’s investments, which includes legacy assets, have given it a return of 10.7% in 2015. But if separated, its international investments have given it about 18% per annum………………………………………..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

Norway’s sovereign wealth fund facing high prices, uncertainty

Posted on 11 January 2016 by VRS  |  Email |Print

Norway’s sovereign wealth fund has $6 billion to spend on global real estate investments, but its head of real estate says there may just not be enough good opportunities out there. High real estate prices in North America, Europe and Asia, as well as the need to partner with local firms, is slowing the fund’s push into the property market, Karsten Kallevig of Norges Bank Investment Management, which oversees the fund, told the Wall Street Journal.
“In the recent five years, we’ve had returns that we absolutely can’t expect over time,” Kallevig told the paper. “Property markets are highly priced.”……………………………………….Full Article: Source

Norway’s Oil Fund Is Finding it Hard to Spend $6 Billion

Posted on 08 January 2016 by VRS  |  Email |Print

Karsten Kallevig has a mandate to spend about $6 billion a year on high-end properties across Europe, North America and Asia. The snag: The freshly minted real-estate chief at Norway’s sovereign-wealth fund can’t find enough bricks for his bucks.
Although it has decided to invest about $6 billion a year in real estate as part of an effort to diversify an $820 billion portfolio built out of the Nordic nation’s oil windfall, the fund managed by Norway’s central bank, is facing a dearth of attractive opportunities. “It’s natural for us to proceed at a slightly slower pace,” Mr. Kallevig, who took office on Jan. 1, said in an interview. “Our appetite hasn’t been reduced. But times are uncertain.”……………………………………….Full Article: Source

What Should Sovereign Wealth Funds Do Now?

Posted on 08 January 2016 by VRS  |  Email |Print

Should they buy or sell stocks? How will oil-based sovereign funds experience a slowdown in the accumulation of financial assets? When equity returns become an important factor for Gulf sovereign fund asset growth, the impact of falling listed equity markets raises issues of fund liquidity. This is why a number of Gulf funds have been redeeming equity mandates in late 2015.
This appears to have been a smart move as 2016 is off to a terrible beginning with China and U.S. equity markets in free fall. Why? Just to name a few – concerned about yuan devaluation, low growth in emerging markets, and falling manufacturing figures in China. On January 7th, 2015, the People’s Bank of China lowered its reference rate for the yuan by 0.5%. The central bank policy move triggered panic; the Chinese equity market closed only 29 minutes after opening when the 7% decline threshold was met………………………………………..Full Article: Source

Middle East investors home in on London property for secure income

Posted on 07 January 2016 by VRS  |  Email |Print

Rasheed Hassan, director of cross-border investment at Savills, said there had been an increase in private wealth flowing from the Middle East in addition to investment by institutions such as sovereign wealth funds. “We’re seeing a lot of enthusiasm from private investors from across the region, seeking income-generating deals in London and the UK regions,” he said.
Qatar’s sovereign wealth fund meanwhile bought the Berkeley and Claridge’s hotels for more than £600m each in April. That followed the purchase of east London’s Canary Wharf skyscraper cluster in a joint venture with Canada’s Brookfield for £2.6bn………………………………………..Full Article: Source

Biggest No Longer Means Best in Qatar’s Strategy for LNG Wealth

Posted on 06 January 2016 by VRS  |  Email |Print

Qatar took 10 years to become the fuel’s largest producer in 2006 and even less time after that to build a $250 billion sovereign wealth fund. With a population of 2.4 million people, it tapped the third-biggest gas reserves to become the wealthiest nation per capita.
Qatar’s gross domestic product in 2014 was $134,182 for each resident compared with $49,537 in neighboring Saudi Arabia, with a population 12 times as large, according to the World Bank………………………………………..Full Article: Source

The Overblown Threat to Money Managers

Posted on 05 January 2016 by VRS  |  Email |Print

The sound of sovereign wealth funds sucking money back home is whistling through the asset management industry. But the direst forecasts for asset managers may be overblown. Sovereign funds have ballooned, from $3.3 trillion in 2007 to $7.2 trillion by the middle of 2015, according to the Sovereign Wealth Fund Institute, a research firm.
At the end of 2014, SWFs — many of them from commodity-rich countries — had $1.9 trillion in equities, $900 billion in fixed income and short-term liquid assets and $400 billion in alternative investments, including real estate, hedge funds and private equity, according to a Bloomberg News report last month based on Moody’s research………………………………………..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

No changes in SOFAZ investment portfolio foreign currency structure

Posted on 04 January 2016 by VRS  |  Email |Print

The State Oil Fund of Azerbaijan (SOFAZ) hasn’t changed the foreign currency structure of its investment portfolio for 2016. On Dec.29, the president of Azerbaijan issued a decree on the approval of main directions (of the program) of using SOFAZ funds for 2016.
Thus, 50 percent of assets may be placed in US dollars, 35 percent - in euros, five percent - in British pounds, and the remaining 10 percent - in other currencies………………………………………..Full Article: Source

FIRPTA Reform a Boon for Sovereign Wealth Funds

Posted on 04 January 2016 by VRS  |  Email |Print

The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) has been an albatross on the neck for many international institutional investors such as sovereign funds and overseas pensions. The act has prevented more overseas capital to flow into the United States. From SWFI’s proprietary Sovereign Wealth Fund Transaction Database, for the calendar year 2015, US$ 14.49 billion has been directly invested by sovereign wealth funds into U.S. real estate versus US$ 18.84 ex-United States.
These numbers reflect data from December 25, 2015 which is not fully calculated for the whole year as more data is being aggregated. These numbers do not include investments in private, commingled real estate funds. Non-U.S. institutional investors like Norway’s Government Pension Fund Global (GPFG) and Abu Dhabi Investment Authority (ADIA) have had to structure purchases to make themselves minority investors, bypassing FIRPTA………………………………………..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

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

Norway Oil Fund Plans Infrastructure Foray in 2017

Posted on 18 December 2015 by VRS  |  Email |Print

Yngve Slyngstad, chief executive of Norway’s oil fund, one of Europe’s largest investors, said Thursday that the fund would be ready to buy infrastructure around 2017 if mandated by the Norwegian parliament, but it would proceed more slowly than it did with real estate.
“We are signaling a relatively slow buildup,” Mr. Slyngstad told The Wall Street Journal in an interview. “It took a little bit more than a year from [when] we got the mandate to invest in real estate until we made our first investment, and that will clearly also be the case for infrastructure.”……………………………………….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

Middle East sovereign wealth funds set to reduce spending in overseas markets as oil prices plunge

Posted on 16 December 2015 by VRS  |  Email |Print

Middle East sovereign wealth funds are likely to cut down international spending next year as they tighten their belts to make up for falling oil prices. According to new research from property broker JLL, Middle Eastern SWFs, known for buying large trophy buildings in London and other key European cities, signed deals to buy US$6.5 billion worth of property in the first nine months of this year – up from about $6bn recorded in the whole of last year and $7bn in 2013.
JLL predicted that the volume of investment from the Middle East funds set up to invest money away from country’s surpluses made from oil, would decline significantly next year as Gulf countries cut back spending because of the weak crude prices. Instead, it said that funds would spend more of their limited budgets on the domestic property market………………………………………..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

This is what happens when oil-rich nations can’t pay their bills

Posted on 15 December 2015 by VRS  |  Email |Print

Low oil prices can be devastating for some states. Take Venezuela for example, where oil represents 95% of the country’s exports and more than half of its GDP. Venezuela now suffers from crippling inflation and is on the edge of default. Other states have been more prudent with their money and have buffers in the form of sovereign wealth funds (SWF). (SWFs are state run investment funds that invest in stocks, bonds, real estate, precious metals, and other alternative investments.)
As of March 2015, sovereign wealth funds around the world held $7.1 trillion in assets according to the Sovereign Wealth Fund Institute. Of which about $4.29 trillion is derived from nations dependent on oil and gas revenues. Five of the world’s largest SWFs that depend on energy revenues account for 45% of total global SWF assets………………………………………..Full Article: Source

Norges Bank bemoans lack of scale for developing nations’ infrastructure

Posted on 14 December 2015 by VRS  |  Email |Print

The manager for Norway’s sovereign wealth fund has bemoaned the smaller scale of infrastructure projects in developing nations after a report to the government called for it be allowed to invest in the asset class.
Noting that infrastructure assets in emerging markets and developing economies present additional challenges not found in OECD countries, a discussion note released by Norges Bank Investment Management (NBIM) nevertheless emphasises that the less mature markets represent “interesting investment opportunities for investors willing and able to take on these additional risks”………………………………………..Full Article: Source

Chaos in Libya: It’s the oil, stupid

Posted on 14 December 2015 by VRS  |  Email |Print

There is seems no end to the bad news coming out of Libya. UN-led negotiations to unite the divided country — it has two parliaments, two governments, two militia coalitions that have been competing for control of a rapidly failing state since summer 2014 — are stalling. Fighting continues apace in Benghazi, the city that was the first to rebel against the rule of Muammar al-Gaddafi in 2011 and is now a byword for extremism.
The assets of the Libyan Investment Authority, the sovereign wealth fund that owns shares in businesses (including the Italian football club Juventus) and real estate across Europe, are being fought over in courts by the rival governments………………………………………..Full Article: Source

Sovereign funds of West Asia get aggressive on India

Posted on 10 December 2015 by VRS  |  Email |Print

If the plunge in crude oil prices was expected to dampen West Asia-based sovereign funds’ ability to make large investments, it is not reflected in India yet. It has enthused their interest as they shift their focus from European markets to emerging ones, where returns are better.
Last week, Kuwait Investment Authority invested $300 million in debt-laden GMR Infrastructure by subscribing to foreign currency convertible bonds. Abu Dhabi Investment Council made two large investments in the year - $300 million in Altico Capital, a non-banking financial company which lends to realty players, and $265 million in ReNew Power………………………………………..Full Article: Source

Forced Selling On The Way From Battered Sovereign Wealth Funds?

Posted on 10 December 2015 by VRS  |  Email |Print

What happens when the music stops and sovereign wealth funds start selling? John Plender at Financial Times notes that plunging oil prices are pressuring oil-producing nations and the way they manage surplus cash. Oil-and-gas producers’ sovereign wealth funds held about $4.2 trillion earlier this year, says the FT, citing an estimate from the International Monetary Fund.
Lower-for-longer oil prices means that Arabian Gulf countries, which sat on comfortable budget surpluses when oil as over $100 a barrel, are projected to have deficits in the years ahead. One structural force to think about: “While sovereign wealth funds have significant holdings of illiquid assets such as property, infrastructure and private equity, it is the more liquid investments such as equities and government bonds that will feel the selling pressure if budgets remain under pressure for a sustained period.”……………………………………….Full Article: Source

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