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The trend towards in-sourcing at sovereign wealth funds is hitting passive managers

Posted on 07 December 2015 by VRS  |  Email |Print

More than two-thirds of non-US sovereign funds located in countries where oil plays a big part in their economy say they expect funding withdrawals due to sustained low prices for the commodity, according to research from Invesco, the $790 billion (Dh2.9 trillion) asset manager. Saudi Arabia, whose deficit widened as oil prices slumped, has already pulled tens of billions of dollars from global asset managers.
In contrast, only 13 per cent of non-US sovereigns located in countries with no oil exposure expect governments to withdraw funding, Invesco found. “This scenario where funds suffer withdrawals could continue, but it really depends on how long there is a sensitivity around oil prices and the need to provide finance to governments,” says Nick Tolchard, head of international development at Invesco………………………………………..Full Article: Source

Sovereign wealth fund investment in healthcare is on the rise, especially in digital health

Posted on 07 December 2015 by VRS  |  Email |Print

In the past couple of years there has been a rise in sovereign wealth funds’ investments in healthcare. These cover a wide range of areas from hospital chains to pharmaceutical companies, but it also includes direct investments in digital health startups.
Permanent Fund is one of the founding investors in Denali Therapeutics, a biotech business targeting neurodegenerative disorders. The motivation behind these investments is a mixture of bullishness about healthcare and the practical reality that companies that can solve healthcare pain points such as improving access to healthcare professionals for underserved populations to treating chronic conditions can improve the care of citizens in the countries these funds serve………………………………………..Full Article: Source

World’s biggest wealth fund refines risk method amid expansion

Posted on 07 December 2015 by VRS  |  Email |Print

The world’s biggest sovereign wealth fund is shaping its own analysis of risk factors as it looks for ways to boost returns and increase its global reach. Because of its size — currently $860bn — Norway’s wealth fund can’t rely on analysis and research that others have come up with, according to Ole Christian Bech-Moen, its chief investment officer for allocation strategies.
“It’s not easy for us to take an off-the-shelf factor strategy and implement it due to the sheer size of the fund,” he said in an interview after speaking at a conference in Oslo yesterday. “We operate in many different markets and trading costs vary a lot in the different markets, so we need to think thoroughly how to implement these strategies.”……………………………………….Full Article: Source

China’s sovereign wealth fund to boost stake in Germany

Posted on 03 December 2015 by VRS  |  Email |Print

China’s sovereign wealth fund is eyeing greater investment in Germany to strengthen its foothold in the manufacturing powerhouse, the fund’s deputy chief has said. Li Keping , vice-chairman of China Investment Corporation, said the more than US$7 billion it had put into Germany was a key part of its global holdings portfolio.
Much of the money flowed through the open market in the form of equities and bonds, Li told a business forum at the German embassy in Beijing on Wednesday. CIC expected to keep those levels largely stable but saw significant room to expand investments in cooperation with private equity funds in Germany, in addition to increasing direct investment………………………………………..Full Article: Source

Qatar-US investment dialogue ‘reflects shared values’

Posted on 30 November 2015 by VRS  |  Email |Print

Speaking at the Second Annual Sovereign Wealth Funds (SWF) Conference held at the Kogod School of Business at American University in Washington, DC, on Qatar Investment Authority (QIA)’s strategy, Qatar’s Ambassador to the US, Mohamed Jaham al-Kuwari said that Qatar is ranked in the 14th place among the most competitive economies in the world ahead of numerous member-states at the Organisation for Economic Co-operation and Development (OECD), affirming Qatar’s stable outlook ‘AA’ ratings.
Such a data has contributed in elaborating Qatar’s development strategy through the Qatar National Vision (QNV) 2030, which clearly focuses on the economic and social progress, al-Kuwari said, pointing out that the future generations will not suffer from depletion of non-renewable resources, but will share the benefits of new sources of renewable wealth………………………………………..Full Article: Source

Malaysia’s 1MDB in China power deal that’s moving markets

Posted on 26 November 2015 by VRS  |  Email |Print

It’s rare to see the Malaysian ringgit rise against the US dollar - especially given its performance this year - down some 18%. Even more curious that it happened while regional currencies like the Indonesian rupiah and Thai baht continued to fall. Research houses are also upgrading their forecasts for Malaysia’s stock markets and the economy.
So what’s driving all this positivity? Well, in part it is thanks to the sale of the energy assets at one of Malaysia’s most notorious institutions: IMDB. 1Malaysia Development Bhd (1MDB) is a state investment fund set up in 2009 and was supposed to turn Kuala Lumpur into a financial hub. But it is currently on a fragile financial footing………………………………………..Full Article: Source

China’s Clout in Malaysia Set to Grow After 1MDB Deal

Posted on 25 November 2015 by VRS  |  Email |Print

China’s $2.3 billion deal to buy power assets from a debt-ridden Malaysian government-investment fund could give Beijing greater sway in the Southeast Asia nation and pave the way for Chinese companies to win a string of coveted infrastructure deals.
State-owned China General Nuclear Power Corp. agreed to pay 9.83 billion Malaysian ringgit ($2.3 billion) in cash and take on an unspecified amount of debt for a group of power plants from 1Malaysia Development Bhd., or 1MDB………………………………………..Full Article: Source

Sovereign Wealth Funds Redemption Risk Overblown?

Posted on 25 November 2015 by VRS  |  Email |Print

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

Rwanda: Agaciro Fund to Diversify Investment Portfolio to Maximise Returns

Posted on 24 November 2015 by VRS  |  Email |Print

Rwanda’s sovereign wealth fund, Agaciro Development Fund (AgDF), will diversify its investment portfolio to venture into different sectors of the economy to maximise returns, Amb Claver Gatete, the Minister for Finance and Economic Planning, has said.
“We have been investing in Treasury bonds and bank deposits, but now we want to diversify into other sectors as we believe that will help us to maximise returns and grow the Fund,” he said while receiving Rwf10 million contribution from MTN Rwanda in Kigali. Government bonds and short-term bank deposits earn the Fund an annual interest of between eight and 12 per cent………………………………………..Full Article: Source

Temasek’s US holdings fell in third quarter amid stock rout

Posted on 17 November 2015 by VRS  |  Email |Print

The value of Temasek Holdings Pte’s US listed securities fell to the lowest level this year as it sold some of its assets and the Standard & Poor’s 500 Index slumped the most since 2011. Singapore’s state-owned investment firm reported US$10.5 billion of holdings as of September 30 in a filing with the US Securities and Exchange Commission on Monday.
That’s a decline of US$5.4 billion from the previous quarter and the lowest since the three months to December, when holdings were US$9.6 billion. The US benchmark index fell 6.9 per cent in the third quarter amid uncertainty over the Federal Reserve’s rate tightening policy and concerns that an economic slowdown in China will curb demand for commodities and crimp global growth……………………………………….Full Article: Source

Ireland to pull billions of euro from global asset managers

Posted on 17 November 2015 by VRS  |  Email |Print

Ireland’s sovereign wealth fund will pull several billion euro from global asset managers over the next five years as the Government tries to use the fund’s assets to bolster the domestic economy.
Some €3 billion of the sovereign fund’s €7.9 billion of investible asset is in global equities, bonds, commodities, infrastructure and absolute return funds run by international asset managers. It will divest from these holdings by 2020 as part of its new mandate to invest in projects and companies with the potential to create jobs in Ireland and boost the economy……………………………………….Full Article: Source

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

Posted on 17 November 2015 by VRS  |  Email |Print

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

SWFs: Activist Investors or Passive Stock Pickers?

Posted on 12 November 2015 by VRS  |  Email |Print

Sovereign wealth funds (SWFs) are less likely to be activist investors than their institutional peers due to their size and legal restrictions, according to research. The amount of money available to SWFs means their intentions when making investments are “important for politicians, unions, and regulatory authorities” to understand, wrote Mark Mietzner (Zeppelin University, Friedrichshafen), Dirk Schiereck (Darmstadt University of Technology), and Denis Schweizer (Concordia University, Montreal).
However, their analysis of 147 companies owned by SWFs showed that these groups probably shouldn’t be too concerned with investors’ ulterior motives: the focus instead is on companies with “higher return on assets, dividend payments, and yields”………………………………………..Full Article: Source

The Future Fund 2.0

Posted on 12 November 2015 by VRS  |  Email |Print

With its 10th birthday looming, the Future Fund is entering its next incarnation complete with a new investment team structure. When David Neal, the inaugural chief investment officer of the Future Fund, became its managing director on August 4 last year, his previous role was split in two. Long-time head of timberland and infrastructure Raphael Arndt became the chief investment officer responsible for leading the investment team in developing the research, due diligence and selection and monitoring processes for assets and investment managers.
Stephen Gilmore, previously the Future Fund’s head of investment strategy, became the chief investment strategy and risk officer. In doing so he took on additional responsibility for managing and monitoring total portfolio risk settings and continuing to focus on portfolio design, and understanding the macroeconomic and market environment. Both report to Neal………………………………………..Full Article: Source

Will Abu Dhabi’s finance hub eat Singapore’s lunch?

Posted on 11 November 2015 by VRS  |  Email |Print

As the International Monetary Fund (IMF) noted in a working paper last year, Hong Kong and Singapore have developed a big enough banking franchise to make them the mainstay financial centres in Asia. But other countries have their eye on the prize of being go-to international finance hubs - the latest of which is the fabulously rich Abu Dhabi, capital of the United Arab Emirates.
Over the past decade, Dubai has attracted some of the biggest names in global finance, leveraging on its position as a stopover on trade routes between Europe and Asia to become the Middle East’s financial hub. Now, its sister emirate down the road, Abu Dhabi, whose sovereign wealth fund alone is an estimated US$1 trillion (S$1.4 trillion), aims to do the same - or even better………………………………………..Full Article: Source

SWFs: Buddies or baddies?

Posted on 06 November 2015 by VRS  |  Email |Print

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

Temasek switches India focus to software

Posted on 05 November 2015 by VRS  |  Email |Print

The venture capital arm of Temasek Holdings is shifting its focus in India to software makers that service small and medium-sized businesses, as it sees the e-commerce sector becoming “overheated” with funds rushing to invest in unprofitable companies.
Vertex Venture Holdings, a unit of Temasek, is hunting for start-ups making cheap software for the nation’s hordes of small businesses that could range from a supply chain app to a payroll processing system, said Mr Ben Mathias, its managing director for India………………………………………..Full Article: Source

A different way of doing things

Posted on 05 November 2015 by VRS  |  Email |Print

Oshawa mayor says country should look to Norway as an example of infrastructure funding. At the last meeting of regional council, councillors voted to endorse a motion brought forward by Henry and fellow Oshawa councillor Nester Pidwerbecki to call on the federal government to establish a sovereign wealth fund, made up of surcharges from natural resource extraction.
It was this line of thinking that led to Norway’s sovereign wealth fund, which sees surplus funds from the country’s nationalized petroleum industry invested into a fund. As of Oct. 16, the worth of the fund was the equivalent of more than $1.1 trillion………………………………………..Full Article: Source

Oil price crash is not panicking petro states

Posted on 05 November 2015 by VRS  |  Email |Print

With their national history of turbulence, Russians have mastered a skill that many of us in the West haven’t had the opportunity to develop: exploiting crisis. The Russian official explained to me that the oil price crash has prompted Russian President Vladimir Putin to draw from two sovereign wealth funds worth more than $150 billion, according to the Sovereign Wealth Fund Institute.
The official explained that the money from the funds would be used to stimulate growth in non-oil sectors. There’s little incentive to develop those sectors if you can just drill a hole in the ground and a cash flow gushes out of it, but plummeting oil prices provided the motivation………………………………………..Full Article: Source

Sovereign funds leaking cash

Posted on 04 November 2015 by VRS  |  Email |Print

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

Temasek Drags Olam From Muddy Waters to Winning $1 Billion Loan

Posted on 03 November 2015 by VRS  |  Email |Print

Olam International Ltd., the Singapore commodities trader that fended off an attack from U.S.-based short seller Muddy Waters LLC in 2012, is discovering it’s good to have friends with deep pockets.
Nineteen banks from around the globe last week lent $1 billion to the company, which has been controlled by Singapore state investment fund Temasek Holdings Pte since 2014. Olam’s 2020 dollar bonds returned 6.9 percent in the past year, as those of rival commodities traders slumped. Noble Group Ltd.’s notes of the same maturity lost 24 percent in the same period and Trafigura Beheer BV’s euro-denominated bonds lost 10.6 percent since their April sale………………………………………..Full Article: Source

Kazakh Sovereign Fund Sees No ‘Sacred Cows’ for Privatization

Posted on 02 November 2015 by VRS  |  Email |Print

Kazakhstan’s sovereign wealth fund Samruk-Kazyna is keeping no “sacred cows” as it prepares to sell stakes in 43 large units including energy companies, its deputy head said. The fund may offer shares in shipping company KazMorTransFlot and is examining the possible sale of stakes in the downstream business of KazMunaiGaz National Co., which may include Kazakhstan-based refineries and Rompetrol, Deputy Chief Executive Officer Dauren Erdebay said in an interview Thursday.
“Besides the pre-sale preparation of a company, the government will do a lot of work in terms of sector regulation, taking into account our task to have an environment where buyers will be able to continue effective ownership,” he said………………………………………..Full Article: Source

Sovereign wealth funds face a rainy day

Posted on 30 October 2015 by VRS  |  Email |Print

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

How Singapore’s S$266 billion investment giant Temasek rode the Chinese share boom

Posted on 30 October 2015 by VRS  |  Email |Print

Unorthodox, resilient and with an enviable earnings record, sovereign wealth fund Temasek is not frightened by the equities roller-coaster. When the Singapore sovereign wealth fund Temasek unveiled an almighty 19.2 per cent one-year return to shareholders in July this year, many questions followed.
Aren’t sovereign funds supposed to be staid and boring, aiming for a shade over inflation? How much risk are they taking to come out with a number like that? How do we do the same? Numbers like these – a total shareholder return of 16 per cent a year since inception in 1974 and 9 per cent annualised over the deeply troubled past 10 years – cause many new sovereign vehicles to look to Temasek as a role model………………………………………..Full Article: Source

World’s Largest Wealth Fund Hit by Oil Slump, Emerging Markets Volatility

Posted on 29 October 2015 by VRS  |  Email |Print

The Norwegian state-controlled oil fund reported losses for the first time in four years just as Oslo is planning to start cash withdrawals for the first time in history, thus leveraging additional pressure to enhance the fund’s market performance.
Kristian Rouz — Norges Bank Investment Management (NBIM), the world’s biggest sovereign wealth fund, reported its biggest losses in roughly four years this past quarter, as the global economic slowdown and Volkswagen scandal weighed on the aggregated value of the fund’s investment. ……………………………………….Full Article: Source

Weak oil prices deplete Russia’s sovereign-wealth fund

Posted on 28 October 2015 by VRS  |  Email |Print

Russia is running out of emergency funds. The country, which has been relying on its sovereign-wealth fund to plug gaps in its budget deficit, said its Reserve Fund is likely to be depleted in 2016. The news is another blow to an economy reeling from weak oil prices and Western-led sanctions in connection with fighting in Ukraine.
“Our reserves volume will decrease by approximately 2.6 trillion rubles ($40.85 billion) — more than half. This means that 2016 is the last year when we are able to spend our reserves that way. After that we will not have such resources,” Russian Finance Minister Anton Siluanov told Tass, the government-owned news agency………………………………………..Full Article: Source

Has the world’s largest sovereign wealth fund peaked?

Posted on 28 October 2015 by VRS  |  Email |Print

Just weeks after the Nobel prizes were announced out of Norway, world attention will shift back to Oslo this week when Norwegians find out how well their country’s sovereign wealth fund, the world’s largest, has weathered the rollercoaster ride in the price of oil.
The signs are worrying: For the first time ever, Norway announced plans to tap its fund to make up for lost oil revenues earlier this month. The country plans on withdrawing around $450 million from the fund which had $820 billion under management as of the end of June of this year………………………………………..Full Article: Source

Omani wealth fund takes $165m legal action against Bulgaria over bank collapse

Posted on 28 October 2015 by VRS  |  Email |Print

Oman’s biggest sovereign wealth fund has filed an arbitration claim against Bulgaria over the collapse of Corporate Commercial Bank (Corpbank), the online database of Washington-based International Centre for Settlement of Investment Disputes showed.
Oman’s State General Reserve Fund (SGRF) fund owned a 30 percent stake in Corpbank, which was Bulgaria’s fourth-largest lender before collapsing last year following a bank run. The bank collapse triggered the Balkan country’s biggest financial crisis since the 1990s, prompting Sofia to pay over 3.6 billion levs ($2.03 billion) to guaranteed depositors and boosting the country’s fiscal deficit for 2014 to 5.8 percent of economic output………………………………………..Full Article: Source

Saudi Wealth Fund Said to Seek Bankers in Global Deals Shift

Posted on 28 October 2015 by VRS  |  Email |Print

Saudi Arabia’s Public Investment Fund is seeking to hire bankers for international deals to help the kingdom acquire overseas technology and expertise, four people with knowledge of the matter said.
The sovereign wealth fund, which holds about $100 billion worth of stakes in local companies, is looking to appoint Saudi nationals with experience at both local and international investment banks, the people said, asking not to be identified as the talks are private. The hires will help the fund make strategic acquisitions in industries including transport, manufacturing and technology that will give Saudi Arabia access to foreign expertise and know-how, according to the people………………………………………..Full Article: Source

Sovereign Wealth Funds In The New Era Of Oil

Posted on 28 October 2015 by VRS  |  Email |Print

As a result of the oil price plunge, the major oil-exporting countries are facing budget deficits for the first time in years. The growth in the assets of their sovereign wealth funds, which were rising at a rapid rate until recently, is now slowing; some have started drawing on their buffers.
In the short run, this phenomenon is not cause for alarm. Most oil exporters have enough buffers to withstand a temporary drop in oil prices. But what will happen if low oil prices persist, and how will policymakers react?……………………………………….Full Article: Source

In Malaysia, 1MDB Scandal Hinders Economic Growth

Posted on 26 October 2015 by VRS  |  Email |Print

This week, with Malaysia’s parliament back in session, the opposition is renewing its efforts to oust Prime Minister Najib Razak through a no-confidence vote. The effort follows the prime minister’s involvement earlier this year in a scandal surrounding the heavily indebted 1Malaysia Development Berhad (1MDB) sovereign wealth fund. Among other points of controversy, Najib is struggling to explain the source of nearly $700 million deposited to his personal account.
Even without the political crisis, Malaysia is already facing economic headwinds because of low commodity prices and a looming interest rate hike by the U.S. Federal Reserve. But the scandal may be worsening the situation. Malaysia’s once globally esteemed financial institutions are now in question, and 1MDB is involved in nearly every part of the Malaysian economy, including energy, agriculture, tourism and real estate………………………………………..Full Article: Source

Norwegian Lessons: Takeouts from a thrifty country

Posted on 26 October 2015 by VRS  |  Email |Print

Is it possible to make a link between what you (should) do as a private investor and what the world’s richest country does? Yes! Therefore, in a series of articles we look at Norway, its sovereign wealth fund – known as Government Pension Fund Global, and the lessons private investors can learn from the country.
Do you usually earn more than you spend and have money left over to invest? If the answer is “yes”, you have something in common with the kingdom in the north. Since 1996, it has been saving part of its oil and gas revenue in its so-called oil fund, which with an value of roughly $875 billion has become the largest sovereign wealth fund, at least of those that make data public………………………………………..Full Article: Source

Australia’s Santos rejects $5.1 bln sovereign wealth-backed bid

Posted on 22 October 2015 by VRS  |  Email |Print

Embattled Australian oil and gas producer Santos Ltd said on Thursday it has rejected a A$7.1 billion ($5.1 billion) takeover proposal from a fund backed by the ruling families of Brunei and the United Arab Emirates.
Santos effectively put itself on the block in August, looking to sell assets in a race to cut its A$8.8 billion net debt as its Gladstone liquefied natural gas (LNG) project begins operations amid a sharp slump in oil prices. It said the bid from Bermuda-headquartered Scepter, pitched at a 26 percent premium to its last trade, was too cheap and included conditions that would hurt Santos’ consideration of other alternatives in its asset sale process and a wider strategic review………………………………………..Full Article: Source

Schwarzman: SWFs build PE exposure, even after oil price collapse

Posted on 21 October 2015 by VRS  |  Email |Print

Sovereign wealth funds are an increasingly important funding source for Blackstone Group, even those that have been hammered by the collapse of oil prices, Chief Executive Officer Steve Schwarzman said during the firm’s third quarter earnings call last week.
There are two types of sovereign funds — those related to oil proceeds, and “all else,” Schwarzman said. Funds reliant on oil proceeds have not been growing, which creates a situation where fund managers have to compete for dwindling resources from those funds, he said. But that doesn’t mean those types of oil-oriented funds are backing away from private equity. “Some of them, interestingly, are significantly increasing their share of alternatives because of its performance characteristics,” Schwarzman said………………………………………..Full Article: Source

Future Fund reduces exposure to emerging markets

Posted on 20 October 2015 by VRS  |  Email |Print

The $118 billion Future Fund moved some of its cash into new hedge funds in the September quarter, as the fund’s managers continued to avoid risk in choppy markets. The national sovereign wealth fund also switched about $1.5 billion from emerging market global equities to developed market equities during the three months to 30 September.
Separately, the federal government made its first contribution of $1.01 billion to the Medical Research Future Fund established by former treasurer Joe Hockey during the quarter………………………………………..Full Article: Source

Sovereign wealth funds in Arabian Gulf sell off assets to plug fiscal deficits

Posted on 19 October 2015 by VRS  |  Email |Print

Sovereign wealth funds (SWFs) across the Arabian Gulf are selling financial assets as the low oil price hits the region’s economies. The Saudi Arabian Monetary Authority (Sama) and the Qatar Investment Authority (QIA) are selling stakes in European companies, as the oil price slump forces Gulf states to run major fiscal deficits for the first time since 2009, and encourages SWFs to plug the gap.
Sama has withdrawn US$1.3 billion from European equities this year, according to Nasdaq estimates. The QIA said last week that it was selling its 10 per cent stake, valued at $615 million, in the German construction company Hochtief, the QIA’s third divestment in three months. Sama and QIA did not respond to requests for comment………………………………………..Full Article: Source

SOFAZ deputy CEO says decrease in oil prices - positive

Posted on 16 October 2015 by VRS  |  Email |Print

Lower oil prices along with decrease in revenues of the State Oil Fund of Azerbaijan (SOFAZ) have some positive impact on the fund’s investment portfolio, Deputy CEO of SOFAZ Israfil Mammadov said, participating in Trend’s This Week in Focus program.
Mammadov said that obviously, the main source of the revenues for the oil fund proceeds from oil and gas projects in Azerbaijan. “We invest in many oil importing countries in emerging economies which benefit from oil prices,” he said, adding that in this case, the decrease in oil prices has a positive impact on SOFAZ’s portfolio………………………………………..Full Article: Source

World’s largest SWFs shed European equities

Posted on 16 October 2015 by VRS  |  Email |Print

The world’s largest sovereign wealth funds (SWFs) of oil-producing nations have been selling European equity holdings as lower oil prices pressure governments to seek additional sources of revenue while keeping up with spending commitments, according to a report by NASDAQ Advisory Services.
The sale of European equities by Norges Bank Investment Management, the Saudi Arabian Monetary Agency and the Abu Dhabi Investment Authority started in May and accelerated through the third quarter, the research firm says. ‘With the selling by oil-dependent SWFs showing no signs of abating, and with these funds suffering from more than solely the weak oil price, the buying activity of oil-rich SWFs across firms may well be something of the past,’ the report notes………………………………………..Full Article: Source

Should markets fear the great sovereign wealth fund liquidation trade?

Posted on 14 October 2015 by VRS  |  Email |Print

After decades of investing billions in bonds, shares and hedge funds, sovereign wealth funds are turning into sellers and redeemers. They’re the largest and most secretive investors in the world, but after decades of investing billions in bonds, shares and hedge funds, these investors are now turning into sellers and redeemers.
Sovereign wealth funds, which control about $US7 trillion ($9.5 trillion) of assets largely created out their nation’s vast mineral riches, are drawing down on their financial wealth as resources decline, creating a potentially vicious feedback loop for financial markets. Last month the Financial Times reported Saudi Arabia’s sovereign fund, SAMA, had declined by $US73 billion, hitting several funds with large redemptions, as the fourth-largest sovereign fund shrunk by one-tenth………………………………………..Full Article: Source

Oil-dependent Saudi, Norway sovereign funds selling European shares-report

Posted on 13 October 2015 by VRS  |  Email |Print

The three biggest sovereign wealth funds of oil-producing countries have been selling European equity holdings since May, a study showed on Monday, another sign of petrodollars being withdrawn from world markets. Asian funds have meanwhile continued to add European equities, according to the data from Nasdaq Advisory Services, which provides analysis on shareholder and investor activity.
Since May, the Saudi Arabian Monetary Authority has sold $1.2 billion worth of equities across Nasdaq’s European client base. That accounts for 13 percent of its $9.2 billion holdings in the European companies tracked by Nasdaq………………………………………..Full Article: Source

With commodities caught in a down cycle, wealth funds have their work cut out

Posted on 12 October 2015 by VRS  |  Email |Print

The job of Norway’s $820 billion sovereign wealth fund, the largest of those that confess up to the amount of assets in their care, is to prepare for the day when the oil money stops rolling in. Such a day may arrive sooner than expected as, while the country still has ample reserves of crude, the collapse in its price has slowed the cash to a trickle, a mere $2 billion in the first half of this year.
Adjustments to Norway’s holdings, which include a noticeable percentage of the world’s stock markets, will have to come from reinvesting dividends and coupons, its manager said. Norway does not have to sell assets, yet. Saudi Arabia has redeemed tens of billions of dollars from fund managers………………………………………..Full Article: Source

All Black magic rubs off on Kiwi sovereign wealth fund

Posted on 12 October 2015 by VRS  |  Email |Print

The mighty All Blacks have won legendary status among rugby-loving nations, but a lesser-known New Zealand team is also quietly building its reputation among its peers. That team is NZ Super, the investment group created in 2001 to ensure pensions promises are met for New Zealand’s ageing population.
NZ Super has become the world’s fastest-growing sovereign wealth fund under the leadership of Adrian Orr, a former deputy governor of New Zealand’s central bank, who arrived in early 2007 as the global financial crisis was unfolding. Mr Orr embarked on a radical re-engineering of the fund’s investment strategy, ditching conventional asset allocation processes in favour of more risk tolerance………………………………………..Full Article: Source

Wealth Funds From Oslo to Riyadh Raid Coffers to Offset Oil Drop

Posted on 09 October 2015 by VRS  |  Email |Print

From Oslo to Doha, Riyadh to Moscow, governments that rode crude’s historic rise to unprecedented wealth are now being forced to start repatriating their rainy-day funds just to make ends meet.
The halving of oil to less than $50 a barrel has the potential to alter one of the most powerful economic and political forces of the past half century: the rise of the petrostate. These countries led a surge in state investments in the U.S. and Europe that now totals about $7.3 trillion globally, according to the Sovereign Wealth Fund Institute………………………………………..Full Article: Source

Trouble from sovereign wealth funds

Posted on 09 October 2015 by VRS  |  Email |Print

All those who believe that the collapse in international commodity prices will be an untrammelled advantage for India would do well to look at what has been happening in the major commodity exporting countries. The sharp decline in revenues has put public finances in these countries under pressure. One logical response has been to pull money out of sovereign wealth funds to maintain public spending.
India could be hit to the extent that these sovereign wealth funds sell emerging market equities in general and Indian equities in particular. The process could already have begun. Norway has said this week that it will dip into its sovereign wealth fund to plug a growing budget hole thanks to the steep decline in global crude oil prices………………………………………..Full Article: Source

Oil-producing nations dip into sovereign wealth funds to fill gaps

Posted on 08 October 2015 by VRS  |  Email |Print

Norway and other oil producers are seen tapping sovereign wealth funds to cover budget shortfalls as cheap crude crimps finances, sparking fears that the flow of money into the world’s financial markets will be affected if this trend continues.
Norway will draw on its sovereign wealth fund — the world’s largest — to cover an expected budget shortfall in fiscal 2016, its finance ministry said Wednesday. The government is seen running a 207.8 billion kroner ($25.3 billion) deficit, not accounting for oil revenue — a 28 billion kroner increase over fiscal 2015. Oil revenue is expected to fall 6% on the year to 204.1 billion kroner, leaving a 3.7 billion kroner hole to be filled from the sovereign wealth fund………………………………………..Full Article: Source

MEFMI: sovereign wealth funds “not a panacea for growth”

Posted on 08 October 2015 by VRS  |  Email |Print

Sovereign wealth funds may help developing countries to manage natural resources but are not a panacea for economic growth, MEFMI’s executive director warned delegates. Caleb Fundanga, former governor of the Bank of Zambia, said governments should establish rule-based frameworks for SWFs that encourage stability and support the development of infrastructure.
The involvement of central banks was also important, he told the MEFMI annual combined forum in Lima on 6 October. Arunma Oteh of the World Bank told the meeting that $7.7 trillion is invested in SWFs worldwide, while the number of SWFs has doubled during the past four years. Yet that did not mean they guaranteed financial stability………………………………………..Full Article: Source

Qatar Investment Authority mulls shifting its focus away from the UK

Posted on 07 October 2015 by VRS  |  Email |Print

One of the world’s largest sovereign wealth funds is reportedly considering shifting its focus away from the UK and Europe more broadly, in favour of the US and Asia. But the Qatar Investment Authority’s (QIA) plans could deal a blow to the City because it regularly takes part in initial public offerings and mergers and acquisitions.
“The QIA is in the process of reviewing its strategy and it remains to be seen whether that will significantly change in terms of the sectors and regions it invests in,” a market expert told the Times………………………………………..Full Article: Source

Biggest Wealth Fund Relies on Income Flows as Oil Cash Wanes

Posted on 02 October 2015 by VRS  |  Email |Print

Norway’s $820 billion sovereign wealth fund is so far coping with the near halt in the inflow of oil cash by using its growing investment income to implement portfolio shifts. With Brent crude this year down about 50 percent from a year ago, the Norwegian government is injecting less cash into the fund. Inflows were just 17 billion kroner ($2 billion) in the first half of this year, compared with a quarterly average of 60 billion kroner over the past 10 years.
The decline has been manageable so far, said Oeyvind Schanke, chief investment officer for asset strategies, at the Oslo-based fund. “We can raise cash from the coupons coming from the fixed income side or the dividends coming from the equity side,” Schanke said……………………………………….Full Article: Source

Painful effects of petrodollar deficit

Posted on 02 October 2015 by VRS  |  Email |Print

The job of Norway’s $820bn sovereign wealth fund, the largest of those that fess up to the amount of assets in their care, is to prepare for the day when the oil money stops rolling in. Such a day may arrive sooner than expected as, while the country still has ample reserves of crude, the collapse in its price has slowed the cash to a trickle, a mere $2bn in the first half of this year.
Adjustments to Norway’s holdings, which include a noticeable percentage of the world’s stock markets, will have to come from reinvesting dividends and coupons, its manager said this week. At least Norway does not have to sell assets, yet. Saudi Arabia, as the Financial Times reported on Monday, has redeemed tens of billions of dollars from fund managers………………………………………..Full Article: Source

Norway’s oil fund looking at Tokyo, Singapore for property investments

Posted on 01 October 2015 by VRS  |  Email |Print

Norway’s US$819 billion (S$1.1 trillion) Government Pension Fund, the world’s biggest sovereign wealth fund, is looking to buy properties in Tokyo and Singapore in the coming months, a key executive said on Wednesday.
The fund, built on revenues from the country’s oil and gas production, has previously bought office blocks, shopping malls and other properties in key cities in Europe and North America, and has a stated ambition of expanding its real estate portfolio to Asia………………………………………..Full Article: Source

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