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Sovereign Wealth Funds Briefing - Category | Reserve Currencies more

Norway has a secret weapon to deal with falling oil prices

Posted on 25 August 2015 by VRS  |  Email |Print

The decade-long boom in oil and gas prices is over. Those falling oil prices continue to have major consequences for oil-dependent countries Venezuela and Nigeria. Norway’s sovereign wealth fund is the largest in the world — and its value keeps growing, by virtue of a government policy that limits the government’s usage of the fund to just four percent annually.
The fund, however, could be the biggest loser in Monday’s global stock market selloff — with almost two-thirds of its investments in equities. And with the current dip in oil prices, the government may be inclined to change the policy to allow access to more of the fund’s assets………………………………………..Full Article: Source

Oman has run up 1.8b riyal deficit so far

Posted on 25 August 2015 by VRS  |  Email |Print

Oman has run a 1.8 billion riyal (Dh17.09 billion) budget deficit so far this year, according data provided by the Ministry of Finance. The approved deficit for 2015 budget stands at 2.5 billion riyals — an increase of 38.9 per cent compared to last year, according to the budget statement.
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

Kuwait’s fiscal prudence pays off with rating agencies

Posted on 24 August 2015 by VRS  |  Email |Print

Kuwait’s strong fiscal and external accounts are behind the country’s eminently favourable credit ratings, with Standard & Poor’s recently conferring a long-term rating of AA. Understandably, rating agencies derive comfort from the country’s substantial sovereign wealth fund (SWF). Kuwait boasts a substantial reserve that provides the necessary cushion for stakeholders like creditors and exporters.
The sovereign wealth fund, as managed by Kuwait Investment Authority, stood at $592 billion in June, ranked among the top in the world as estimated by the Sovereign Wealth Institute. General reserves have received a major boost over recent years after a decision to raise funding set aside as part of the mandate for the future. In 2013 — or before the drop in oil prices — a decision was made to increase the amount set aside — 25 per cent rather than 10 per cent of oil revenues………………………………………..Full Article: Source

Saudis Could Face An Open Revolt At Next OPEC Meeting

Posted on 21 August 2015 by VRS  |  Email |Print

Saudi and Gulf Arab OPEC members’ foreign currency reserves and sovereign wealth funds (SWF) comprise approximately 78 percent of total OPEC member holdings, $2.73 trillion of $3.05 trillion.
Of the non-Saudi, non-Gulf Arab ally OPEC members, only Libyan per capita resources exceed the average. (The UAE includes data for three SWF funds only: Abu Dhabi Investment Authority ($773 billion), Abu Dhabi Investment Council ($110 billion), and Investment Corporation of Dubai ($183 billion))………………………………………..Full Article: Source

Canada’s natural-resource wealth must be included on balance sheets

Posted on 19 August 2015 by VRS  |  Email |Print

The amount of natural-resource wealth within Canada’s borders is impressive. Natural-resource assets, which include timber, oil, natural gas and other subsoil minerals, have been valued by Statistics Canada at about $1-trillion. This puts Canada in an enviable position relative to other countries.
Similar reasoning is reflected in Norway’s leverage of its natural-resource wealth, largely from oil and gas revenue, into $1.1-trillion in investments through its sovereign wealth fund. Compare that with Alberta’s Heritage Fund portfolio of just $17.9-billion………………………………………..Full Article: Source

Alberta and Norway: Two oil powers, worlds apart

Posted on 17 August 2015 by VRS  |  Email |Print

As world oil production outstrips demand, China’s outlook darkens and prices plumb levels not seen since the Great Recession, energy-exporting countries around the world face a prolonged period of thinner revenues and deepening economic woes. The Alberta Heritage Savings Trust Fund, the province’s rainy-day umbrella, barely has enough capital to deal with a few scattered storms. Norway’s equivalent, which was partly modelled on Alberta’s when it was set up in the early 1990s, could handle a deluge of almost biblical proportions.
Consider the fortune amassed by Norway’s prosperity fund. Norway’s petroleum treasure chest holds assets totalling some seven trillion kroner ($1.1-trillion), making it the world’s largest sovereign wealth fund. It’s a potential shock absorber of a size and scope not available to any other energy producer outside the Arabian Peninsula……………………………………….Full Article: Source

Norway might have to dip into its savings

Posted on 11 August 2015 by VRS  |  Email |Print

If the government has to withdraw money from its $875 billion sovereign wealth fund, it will be a historical step. It’s either that, or heavily rein in fiscal spending at a time when the country needs it most. The state’s spending could start to outstrip income from oil, which it pours into its wealth fund for future generations.
Taking money from the fund wasn’t planned for at least a few decades and no finance minister wants that to be their legacy. Approaching that withdrawal will spawn an ugly debate about what got Norway there faster than expected, and maybe even new legislation………………………………………..Full Article: Source

KSA may increase focus on nonoil revenue generation

Posted on 10 August 2015 by VRS  |  Email |Print

Pressure on Saudi Arabia’s state finances is mounting as oil prices fall but the latest official figures suggest the world’s top crude exporter still has at least several years before it faces a budget crunch. A study by a former SAMA official released last week said the world might have entered a sustained period of low oil prices, leaving Riyadh vulnerable down the road.
But data released by Saudi Arabian Monetary Agency (SAMA) last week showed the Kingdom still far from any fiscal crisis. Net foreign assets at the bank — the best indicator of Riyadh’s fiscal strength, since the bank acts as a sovereign wealth fund — fell $59.8 billion from the end of 2014 to $664.5 billion in June………………………………………..Full Article: Source

Saudi foreign reserves fall to lowest since March 2013

Posted on 07 August 2015 by VRS  |  Email |Print

Net foreign reserves at Saudi Arabia’s central bank fell to 2.492 trillion riyals ($664.5 billion) in June, down 1.2 percent from May to their lowest level since March 2013, latest central bank data has showed. The world’s largest oil exporter has been drawing down its reserves to cover a huge state budget deficit caused by low oil prices.
The central bank serves as the kingdom’s sovereign wealth fund, storing its accumulated earnings from oil exports. Net foreign assets dropped 9.4 percent from a year earlier in June. They peaked at a record $737 billion last August………………………………………..Full Article: Source

Banglades sovereign wealth fund in the offing to fix infrastructure

Posted on 06 August 2015 by VRS  |  Email |Print

Bangladesh plans to form a sovereign wealth fund with its foreign currency reserves to invest in infrastructure, the lack of which is turning out to be the main barrier to getting out of the 6-percent economic growth trap. A sovereign wealth fund (SWF) is a pool of money derived from a country’s reserves, set aside for investment purposes that will benefit the country’s economy and citizens.
The initial size of the fund would be $1-$2 billion, according to Bangladesh Bank Governor Atiur Rahman. At present, the central bank has foreign exchange reserves of more than $25 billion, and by the end of the year will cross the $26-billion mark………………………………………..Full Article: Source

Chile fiscal deficit 0.3 pct in first half as copper prices pinch

Posted on 31 July 2015 by VRS  |  Email |Print

Chile posted a fiscal deficit of 0.3 percent of estimated gross domestic product in the first half of 2015, the government’s budget office reported on Thursday, due to weak copper revenue. The deficit was the equivalent of $792 million. Chile is the world No.1 copper producer and has suffered as prices languish at multiyear lows due to worries over demand in key buyer China.
Meanwhile, the country’s rainy day sovereign wealth fund fell in value to just under $14 billion by the end of June, compared to $14.7 billion at the end of last year. The fiscal deficit in the second quarter was 0.4 percent after a slim 0.1 percent surplus in the first three months of the year, the budget office said………………………………………..Full Article: Source

Yuan joins top five basic currencies of Azerbaijan’s Oil Fund

Posted on 29 July 2015 by VRS  |  Email |Print

Chinese yuan joins top five basic currencies of the State Oil Fund of Azerbaijan (SOFAZ). According to SOFAZ, as of July 1, 50.1% of its investment portfolio were denominated in U.S. dollars ($17.889 bn), 34% - in euro (€10.866million), 5.1% - in British pounds (£1.169bn), 1.8% - in Russian rubles (RUB 36.215 bn) and 1.4% - in yuan renminbi (CNY 3 bn).
The top five currencies are followed by Korean won (1.2% of portfolio or KRW 487.760 million), Turkish lira (1.1% or TRY 1.046 bn) and Australian dollar (0.6% or AUD 202.1 million). As of July 1, 2015, the Fund’s investment portfolio was estimated at the level of $35.726 bn and its general assets – at the level of $35.783 bn………………………………………..Full Article: Source

State Oil Fund of Azerbaijan hasn’t bought physical gold for 5 quarters at a run

Posted on 28 July 2015 by VRS  |  Email |Print

The State Oil Fund of Azerbaijan (SOFAZ) hasn’t bought physical gold for five quarters in a row (2nd, 3rd, 4th quarters of 2014, and 1st -2nd quarter of 2015). The Fund informs that as of 1 July 2015 it owned physical gold worth $1.14 bn (last quarter it was $1.15 bn) which was equal to 3.2% of its investment portfolio ($35.726 bn).
“By the reported date SOFAZ had 30.17 tons of gold (970,146 ounces of gold),” SOFAZ said in a statement. This level of reserves conformed to the index as of 1 April 2014. The investment rules allow the Fund to invest up to 5% of its portfolio in physical gold………………………………………..Full Article: Source

Iran’s foreign reserves total US$115-125 billion - minister

Posted on 27 July 2015 by VRS  |  Email |Print

Iran’s foreign reserves total between US$115 billion and US$125 billion (£74.2 billion and £80.7 billion), including assets in its sovereign wealth fund, its industry minister said on Friday in one of the most detailed public descriptions of the reserves by an Iranian official.
The size of the foreign reserves and the way in which Iran uses them will be crucial in its efforts to rebuild its economy after years of international sanctions, which may be removed around the end of this year after last week’s agreement between Tehran and world powers on its nuclear programme. The National Development Fund of Iran, which was founded in 2011 and receives a portion of oil and gas export proceeds, has around US$20 billion to US$25 billion………………………………………..Full Article: Source

China’s Total Gold Holdings Much Higher – Owns Gold In SAFE and CIC

Posted on 21 July 2015 by VRS  |  Email |Print

China revises up its stated gold reserves in bid for IMF membership and reserve currency status. China announces a 604 tonne increase in gold reserves. First public disclosure re reserves in since 2009. China true gold holdings much higher as also owns gold in SAFE and CIC.
China officially owns around 1,660 tonnes of gold reserves – true total figure is likely much larger. Playing long game – protecting USD reserves and positioning RMB as global reserve currency. It is important to remember that as we have long pointed out two other entities, besides the PBOC, have also been buying gold – the State Administration of Foreign Exchange (SAFE) and the China Investment Corporation (CIC). Although if the combined holdings of the PBOC, SAFE and CIC were added together, China may well be the second largest holder of gold bullion – after the U.S. – assuming that U.S. gold reserve figures, which have not been publicly audited in over 60 years, are accurate………………………………………..Full Article: Source

Kuwait fiscal reserves hit record $592b

Posted on 10 July 2015 by VRS  |  Email |Print

Kuwait’s financial reserves defied a slump in oil prices to hit a record 179.2 billion dinars ($592 billion) at the end of the 2014-15 financial year, a report said Thursday. They grew by $53 billion in the year to March 31, Al-Qabas newspaper reported, citing figures released by Finance Minister Anas al-Saleh to a closed session of parliament last week.
The reserves are held in two state funds, the State Reserve Fund and the Reserve Fund for Future Generations. Both are run by the Kuwait Investment Authority, the Gulf emirate’s sovereign wealth fund. Years of high oil prices have given Kuwait healthy budget surpluses to invest in foreign assets………………………………………..Full Article: Source

Russian Minister Calls for Wealth-Fund Boost to Stem Ruble Gains

Posted on 03 July 2015 by VRS  |  Email |Print

Russia should start replenishing its Reserve Fund with proceeds from higher oil prices to stem the ruble’s appreciation, according to Finance Minister Anton Siluanov. The Finance Ministry proposes buying foreign currency for one of its two sovereign wealth funds if oil prices rise higher than $70 per barrel, Siluanov told reporters Thursday.
President Vladimir Putin has backed a weak-ruble policy as a lifeline to Russian producers struggling with a contracting economic amid U.S. and European Union sanctions over Ukraine. A rally in the ruble, the world’s best performer this year after losing almost half of its value in 2014, slowed after the Bank of Russia resumed foreign-currency purchases for its international reserves in mid-May………………………………………..Full Article: Source

Saudi central bank May net foreign reserves drop 1% to $672bn

Posted on 01 July 2015 by VRS  |  Email |Print

Assets dropped by 8.1 per cent from a year earlier to their lowest level since April 2013, central bank data showed. Net foreign assets at Saudi Arabia’s central bank fell to SAR 2.521 trillion ($672.2 billion) in May, down by $6.6bn or 1.0 per cent from the previous month as the kingdom continued to draw down reserves to cover a budget gap caused by cheap oil.
Assets dropped by 8.1 per cent from a year earlier to their lowest level since April 2013, central bank data showed on Tuesday. The central bank serves as the country’s sovereign wealth fund, storing its earnings from oil exports. Assets’ year-on-year drop is partly due to the strong U.S. dollar, which has cut the value of the portion denominated in non-dollar currencies, but a major part is due to a fiscal drawdown, analysts say………………………………………..Full Article: Source

Government should restart contributions to NZ Super Fund

Posted on 25 June 2015 by VRS  |  Email |Print

The New Zealand Superannuation Fund has been the world’s most successful sovereign wealth fund over the past five years. In that time, it has returned 17 per cent a year. Over the past three years, the going’s been even better, at 21 per cent. These are frankly extraordinary numbers – as fund chairman Gavin Walker said last week, if he saw an investment product promising such returns, “I would be thinking it was too good to be true”.
It wasn’t too good to be true, but it is too good to last. The fund’s managers held their nerve during the global financial crisis and bought underpriced equity – they have made hay as the global economy has recovered. There won’t always be such lucrative opportunities – inevitably, given the fund’s mandate to take some risks, there will be down times too………………………………………..Full Article: Source

How China’s race to reserve currency status will rock markets

Posted on 24 June 2015 by VRS  |  Email |Print

The inclusion of the Chinese renminbi into the basket of IMF’s reserve currencies will radically transform global markets and developing countries’ central banks policies. That’s according to Ashmore’s head of research Jan Dehn, who shared his views during a press roundtable on Tuesday.
Dehn said China would no longer need its foreign exchange reserves once its reaches global reserve status. He compared it to the US, which currently has hardly any foreign exchange reserves. ‘This means that China’s foreign exchange reserves, nearly $4 trillion, will become a sovereign wealth fund, which is not going to be invested in US dollar, but in global infrastructure, private equity and alternatives.’……………………………………….Full Article: Source

Qatar vast gas reserves ‘to last 138 years’: report

Posted on 22 June 2015 by VRS  |  Email |Print

Qatar’s gas reserves are so vast it can maintain production at current rates for another 138 years, according to an official report published on Sunday. An “Economic Commentary” from the Qatar National Bank (QNB) said the vast reserves of the tiny Gulf country will ensure it maintains its prominent position in the hydrocarbon sector “for years to come”.
It added that “Qatar has enough gas reserves to maintain production at current rates for 138 years”. “Looking forward, Qatar is expected to maintain its dominant role in the global hydrocarbon sector,” read the QNB report………………………………………..Full Article: Source

Nations fail to extract value from public assets worth more than GDP

Posted on 16 June 2015 by VRS  |  Email |Print

Citi chief economist Willem Buiter argues that one of the best ways to extract this value is through national wealth funds (NWF), ” a single institution, removed from direct government influence”. “This requires setting up an independent, ring-fenced body at arm’s length from daily political influence and enabling transparent, commercial governance,” he says.
The NWF differs from the more known sovereign wealth fund (SWF) in that the latter is a more liquid vehicle, investing largely in traded securities across major markets. A national wealth fund, by contrast, is more concerned with the “active management of operational assets as a portfolio”, Citi says………………………………………..Full Article: Source

National Assembly soon to debate bill on gas resources

Posted on 10 June 2015 by VRS  |  Email |Print

Igalula Member of Parliament Athuman Mfutakamba wanted to know when the government would deposit revenue from gas in the ‘Sovereignty Wealth Fund’ once the government selling the product in 2020. Responding, the deputy minister said after gas discovery in the country there has been heavy investment in the sector from both private and public sectors through contracts.
He said the contracts will be transparent as far as the distribution and allocation of revenue from gas resources is concerned, explaining: “The government will also establish a transparent system on how to make decisions concerning the use of funds from natural gas and where to invest the sovereign wealth fund.” Dr Kitwanga added that under the system it will be decided which areas and at what time the Sovereign Wealth Fund will be allocated, especially for the future generation………………………………………..Full Article: Source

Sovereign investors want larger exposure to Chinese yuan: Invesco

Posted on 09 June 2015 by VRS  |  Email |Print

Central banks have a growing appetite for risk, wanting more exposure to the Chinese yuan - a view that is also adopted by sovereign wealth funds around the world, a new survey has found. While less than 1 per cent of central bank portfolios were invested in renminbi, 43 per cent of them were interested in gaining more exposure to the currency, an annual soverign asset management study said.
Thirty-five per cent of global sovereign wealth funds reported that they were seeking renminbi exposure. The study by Invesco, released Monday, interviewed 59 sovereign investors across the globe, with assets totaling US$7.09 trillion (S$9.6 trillion). Individual investors were not named but the report included a sample from Singapore………………………………………..Full Article: Source

Dar seeks transparent expenditure of gas resources earnings

Posted on 09 June 2015 by VRS  |  Email |Print

The government will put in place transparent procedures on how to make decisions on expenditure of earnings from natural gas resources, including investing in sovereign wealth fund, the Parliament was told. Deputy Finance Minister, Mr Adam Malima, said in Parliament yesterday that the government will put in place the said procedures in a legal framework to govern exploitation of resources which is currently being prepared.
Mr Malima was responding to a question from Mr Athuman Mfutakamba (Igalula - CCM), who asked whether it is appropriate to invest in Sovereign Wealth Fund when Tanzania begins commercial exploitation of natural gas and petrol. Tanzania’s profile has been transformed from that of a least developed country to one of the hottest for the global energy industry, due to the discovery of offshore gas potential of 53.5 trillion cubic feet………………………………………..Full Article: Source

IMF Says China’s Yuan No Longer Undervalued

Posted on 01 June 2015 by VRS  |  Email |Print

China’s currency is no longer undervalued given its recent appreciation, but the government should pick up the pace in loosening controls on the exchange rate, the International Monetary Fund said. Economists critical of the IMF’s assessment said it did not reflect the real value of the Chinese yuan, and that the IMF was being pressured by Beijing to help clear the way for the yuan to be added to the Special Drawing Rights basket.
The IMF said in a statement in Beijing on Tuesday that “our assessment now is that the real effective appreciation over the past year has brought the exchange rate to a level that is no longer undervalued.”…………………………………Full Article: Source

Account for $30bn excess oil money – Oshiomhole tasks Okonjo-Iweala

Posted on 29 May 2015 by VRS  |  Email |Print

Edo State Governor, Comrade Adams Oshiomhole, yesterday came for the Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, requesting her to account for an estimated $30 billion which should have accrued to the government based on the official oil exports of 2.3 million barrels per day.
Wondering why the management of public finance was shrouded in secrecy under her tenure, Oshiomhole called on the Finance Minister to tell Nigerians before leaving office how the economy was managed since her coming on board in 2011………………………………Full Article: Source

Nigeria earned N12.3 trillion as excess crude oil money in 4 years – Okonjo-Iweala

Posted on 26 May 2015 by VRS  |  Email |Print

Nigeria earned a huge $61.7 billion (about N12.3 trillion) in four years as excess crude oil money, the finance minister, Ngozi Okonjo-Iweala, said Saturday. According to the minister, Nigeria earned about $18.14 billion in 2011; $18.16 billion in 2012; $15.19 billion in 2013; $8.01 billion in 2014, and $2.17 billion in 2015.
The Excess Crude Account is one of the two accounts (dollar and Naira) where the Nigerian government saves revenue earnings from the difference between budgeted benchmark crude oil price and the actual price at the international market in a given year………………………………………..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

Norway’s 2015 GDP growth prediction slashed

Posted on 19 May 2015 by VRS  |  Email |Print

Economic outlook for mainland economy in Norway isn’t looking quite as rosy as original hoped, with the minority government proposing a revision to the 2.0 per cent growth predicted, revised down to 1.3 per cent. The government is planning to spur the economy slightly more with ‘oil cash’ it has in reserve, a sovereign wealth fund created especially for such a purpose.
Meanwhile the oil sector continues to tighten belts, so the government plans to spend a record 168.8 billion kroner ($22.45 billion) of this fund, amounting to 2.6% of it’s total value, to spur economic growth through investment………………………………………..Full Article: Source

Hong Kong Monetary Authority racks up HK$85.9 billion in forex losses over 15 months

Posted on 08 May 2015 by VRS  |  Email |Print

The Hong Kong Monetary Authority needs to improve its foreign exchange trading strategies after racking up a grand total of HK$85.9 billion in forex losses over the past 15 months. Cutting exposure to the yen, euro and pound and using hedging tools are among the investment advice offered by currency traders.
“The HKMA could be a better currency trader if it could adjust its currency mix in the near future,” said Jasper Lo Cho-yan, marketing director of Tung Shing Futures. He said the HKMA had to reduce its exposure to the yen, pound and euro………………………………………..Full Article: Source

SOFAZ to further invest in ruble, lira

Posted on 05 May 2015 by VRS  |  Email |Print

Azerbaijan’s state oil fund SOFAZ, will further invest in both the Russian and Turkish currency - respectively the ruble and the lira, despite their devolution. SOFAZ head, Shahmar Movsumov said investing in the Russian ruble and Turkish lira are strategic moves.
“They are long-term moves and do not depend on the value of these currencies,” Movsumov said last week. “Therefore, we will continue to invest in them.” As part of SOFAZ’s investment policy, up to 50 percent of all assets are in USD, up to 35 percent in euros, up to five percent in British pounds, and the remaining 10 percent in other currencies, including the Russian ruble, the Australian dollar, Korean Won and Turkish lira………………………………………..Full Article: Source

Australia’s Future Fund heavy in cash

Posted on 05 May 2015 by VRS  |  Email |Print

Australia’s A$117 billion ($90.9 billion) Future Fund is holding more cash this year, as the hunt for value in global markets becomes increasingly challenging. “We’ve always thought quite hard and quite deeply about the option value of cash,” concluding that cash doesn’t have to be a “drag … on your portfolio, provided you have a process in place and a governance in place” to deploy it when the time is right, David Neal, the Future Fund’s managing director, said.
The topic is relevant to a central debate among asset owners over whether the deluge of central bank liquidity inflating market valuations now will succeed in returning the global economy to sustainable growth………………………………………..Full Article: Source

Russian FinMin Siluanov Warns Large Deficit Could Consume Reserves

Posted on 29 April 2015 by VRS  |  Email |Print

Russian state-owned companies have lobbied the Kremlin for “loans and capital injections” from the country’s two large sovereign wealth funds, the National Welfare Fund and Reserve Fund. Western sanctions have affected Russian state-owned enterprises (SOE) from tapping Western capital markets for funding.
Russian Finance Minister Anton Siluanov warned that Russia could use up all of its Reserve Fund in 18 months if spending is not carefully monitored. TASS news agency reported Siluanov speaking to students in St. Petersburg, “This year we will use up to 3 trillion rubles [US$ 59 billion] of the Reserve Fund’s 5 trillion [US$ 98 billion], that is, we could basically use it up in a year and a half if we don’t approach our budget policy responsibly.”……………………………………….Full Article: Source

Norway central bank to continue buying Kroner for oil fund

Posted on 10 April 2015 by VRS  |  Email |Print

Norway’s central bank said it would continue to buy Norwegian kroner and sell foreign exchange in the market in November on behalf of the country’s sovereign-wealth fund. As in October, Norges Bank said it would sell the equivalent of 250 million Norwegian kroner ($37.2 million) a day in foreign exchange over the coming month and use the kroner it receives to cover public spending.
Norway receives income from its lucrative oil industry in both kroner and foreign currency. It receives foreign currency income from its direct ownership of stakes in oil companies and Norwegian kroner mainly in taxes from oil companies operating in Norway………………………………………..Full Article: Source

Norway central bank to continue buying Kroner for oil fund

Posted on 09 April 2015 by VRS  |  Email |Print

Norway’s central bank said it would continue to buy Norwegian kroner and sell foreign exchange in the market in November on behalf of the country’s sovereign-wealth fund. As in October, Norges Bank said it would sell the equivalent of 250 million Norwegian kroner ($37.2 million) a day in foreign exchange over the coming month and use the kroner it receives to cover public spending.
Norway receives income from its lucrative oil industry in both kroner and foreign currency. It receives foreign currency income from its direct ownership of stakes in oil companies and Norwegian kroner mainly in taxes from oil companies operating in Norway. Until recently the kroner income was enough to meet Norway’s public spending needs but as the country’s oil reserves have declined this is no longer the case………………………………………..Full Article: Source

Azerbaijan’s non-oil sectors to be key to its sustainable development

Posted on 02 April 2015 by VRS  |  Email |Print

Azerbaijan has developed almost unrecognizably in the past five years. The economy has continued to grow at a significant level and, despite various challenges such as the falling of oil prices, the country has demonstrated a remarkable ability to ride any concerns through carefully chosen investments and sensible policies. SOFAZ, the State Oil Fund of Azerbaijan, has widened its investment portfolio while also reducing expenditure.
This is a prudent move bearing in mind that Azerbaijan is still heavily dependent on its income from oil and gas. The Republic is now also an increasingly attractive place for investment and cooperation. While the Final Investment Decision in December 2013 at Shah Deniz II was a monumental moment for Azerbaijan’s economy, it also demonstrated what opportunities are available for foreign investors………………………………………..Full Article: Source

Putting oil revenues into a savings fund isn’t always a great idea

Posted on 31 March 2015 by VRS  |  Email |Print

Pundits outside Alberta are almost unanimous in their support for a Norway-style sovereign wealth fund. If only the Alberta government had saved more of its resource revenues, the argument goes, then the Alberta government would have saved more of its resource revenues. Or something like that; details are never the strong suit of big-picture pundits. It’s usually enough to make the clearly unarguable point that it would nice to have an extra $1 trillion on hand, just like the Norwegians.
The Alberta government could have set aside some of its revenues into a wealth fund. But then again, so could have the federal government and any of the other provincial governments; Quebec already has put away $7 billion into its Generations Fund. The mechanics are pretty simple: set expenditures less than revenues and put the savings into a wealth fund………………………………………..Full Article: Source

An idea for Ring of Fire’s riches

Posted on 30 March 2015 by VRS  |  Email |Print

Ontario should look to socialist Norway if it wants to capitalize on the rich mineral deposits of the far north’s Ring of Fire. Like Canada, Norway has a resource-based economy, exploiting extensive reserves of oil, natural gas minerals and lumber. Half its export revenues come from oil and gas. The money was invested in financial markets outside Norway. It grew. Their sovereign wealth fund, created a mere 20 years ago, now controls about one per cent of all publicly traded shares in the world.
It’s a rainy-day fund, set up because oil won’t flow forever. And Norway’s oil production has dropped to one-half of what it was in 2001, according to Huffington Post business editor Daniel Tencer in a recent article. Alberta established a Heritage Trust Fund in 1976, but stopped contributing to it. According to a report last month by the Macdonald-Laurier Institute, the total topped out a $17 billion, about one-tenth what it could have grown to with a strategy like Norway’s………………………………………..Full Article: Source

Singapore fund declares big Dollar General stake

Posted on 20 March 2015 by VRS  |  Email |Print

A major global investment firm doesn’t appear too worried about the prospects for Dollar General following its failed bid for rival Family Dollar and the pending retirement of Chairman and CEO Rick Dreiling and CFO David Tehle. GIC Private, the former Government of Singapore Investment Corp., this week declared a 5.0 percent stake in Goodlettsville-based Dollar General.
The sovereign wealth fund manages more than $100 billion and employs about 1,200 people worldwide. Its stake in Dollar General, which has risen about 7 percent (Ticker: DG) so far this year, is worth about $1.1 billion………………………………………..Full Article: Source

GCC SWF’s can absorb shocks from oil volatility

Posted on 16 March 2015 by VRS  |  Email |Print

Sovereign wealth funds (SWFs) in Gulf Cooperation Council (GCC) countries are functioning as both diversification engines and shock absorbers during times when oil prices fall, according to Bruno Daher, chief executive officer of Credit Suisse in the Middle East and the Indian subcontinent.
The funds were created to provide future generations with a safety cushion, given the heavy reliance GCC economies have on oil. When oil prices are high, governments generate strong fiscal surpluses that are channelled into SWFs. But when prices fall below the fiscal budget break-even oil price, governments often dip into their reserves to fund the deficit………………………………………..Full Article: Source

Global finance faces $9 trillion stress test as dollar soars

Posted on 12 March 2015 by VRS  |  Email |Print

The world is more dollarized today that any time in history, and therefore at the mercy of the US Federal Reserve as rates rise. You would not think it possible that an Asian sovereign wealth fund could run into trouble too, but Malaysia’s 1MDM state fund came close to default earlier this year after borrowing too heavily to buy energy projects and speculate on land. Its bonds are currently trading at junk level.
It became a piggy bank for the political elites and now faces a corruption probe, a recurring pattern in the BRICS and mini-BRICS as the liquidity tide recedes and exposes the underlying rot………………………………………..Full Article: Source

SOFAZ to expand currency basket

Posted on 02 March 2015 by VRS  |  Email |Print

Azerbaijan’s state oil fund SOFAZ which is in charge of accumulating and managing the country’s oil and gas revenues, keeps on agenda the inclusion of Chinese yuan in the Fond’s currency basket. SOFAZ head Shahmar Movsumov told Trend that SOFAZ’s all assets, including the investment portfolio, are in foreign currency.
“SOFAZ’s assets are in US dollars, euros, British pounds and other currency for diversification,” he said. “Taking into account that the assets in foreign currency impact the balance sheet in manat, the fluctuations in foreign currency exchange rates versus the manat lead to the exchange rate difference.”……………………………………….Full Article: Source

Samruk-Kazyna limits forex transactions of its subsidiaries

Posted on 26 February 2015 by VRS  |  Email |Print

Samruk-Kazyna National Wealth Fund of Kazakhstan has instructed its subsidiaries to abstain from making unnecessary foreign currency transactions, Tengrinews reports citing the head of the Fund Umirzak Shukeyev as saying at the press-briefing in the Central Communication Service’s headquarters on February 20.
“To support the Kazakh national currency we have introduced a special corporate standard that prohibits all of our subsidiaries from making unnecessary foreign exchange transactions. Unless there is a specific business need for such a transaction they will have to justify it to us that they really need the foreign currency,” he said………………………………………..Full Article: Source

Kazakh Fund Says FX Sales Alone Won’t Shore Up Tenge

Posted on 23 February 2015 by VRS  |  Email |Print

Kazakhstan’s sovereign wealth fund, which controls oil producer KazMunaiGaz and the nation’s rail monopoly, said selling its companies’ foreign-currency earnings alone won’t stave off pressure on the tenge to decline.
“We are ready to fully support” a request to stabilize the tenge and the Kazakh financial sector, “but we will do it intelligently, taking into account the needs of every unit,” Yelena Bakhmutova, deputy chief executive officer of the fund, known as Samruk-Kazyna, said in an interview in Almaty on Friday. “We will try to implement our part, but I am afraid that our deeds alone won’t change the situation on the market.”……………………………………….Full Article: Source

Where is Christy Clark’s plan now to save some revenue from B.C.’s rich resources?

Posted on 23 February 2015 by VRS  |  Email |Print

In the run-up to the 2013 election, Premier Christy Clark was dreaming big about sky-high LNG revenues, and a soon-to-be established Prosperity Fund to share today’s revenue from the non-renewable resource with tomorrow’s citizens. Does this mean the idea of some kind of sovereign wealth fund is, like much of Clark’s projected revenue stream, dead in the water?
Of course a sovereign wealth fund is more than just a pot of money that sits and grows and is never spent. The authors note that other jurisdictions put earnings from the savings to such uses as stabilizing government revenues over time, funding infrastructure and even maintaining healthy pension funds………………………………………..Full Article: Source

China grants GIC licence to invest in renminbi-denominated mainland assets

Posted on 16 February 2015 by VRS  |  Email |Print

China’s securities regulator has handed out a renminbi qualified foreign institutional investor (RFQII) licence to Singapore sovereign wealth fund GIC Pte Ltd, AsianInvestor reported on Friday. It was among 10 new licences announced late Thursday by the China Securities Regulatory Commission (CSRC), five of which went to Korean asset managers and two more to Singapore-incorporated entities, CSAM Asset Management and Neuberger Berman Singapore.
Previously, there were 10 Singapore holders of RQFII permits including Fullerton Fund Management, a unit of Singapore state investment company, Temasek Holdings. Beijing introduced the RQFII programme in 2011 to provide another way for foreign investors to participate in inest in mainland securities, as part of its efforts to speed up the liberalisation of of its currency and financual markets……………………………………….Full Article: Source

Oil To Account For Only 5% Of UAE’s GDP By 2021- Deputy PM

Posted on 10 February 2015 by VRS  |  Email |Print

The contribution of oil revenues to the UAE’s GDP is set to drop from around 30 per cent at present to only five per cent by 2021, the country’s deputy PM said on Monday. Speaking at the Government Summit in Dubai, Sheikh Saif bin Zayed, who is also the UAE’s Interior minister, said that the current drop in oil prices was a “challenge, but not a crisis.”
Sheikh Saif stressed that the country was diversifying into sectors such as investment – through institutions such as sovereign wealth fund ADIA, and into developing its human resources. “While oil is considered the wealth of a country, our true wealth lies in investing in the mind, investing in the education of our children,” he said………………………………………..Full Article: Source

Norwegian Krone Strengthens on Central Bank Buying Plan

Posted on 02 February 2015 by VRS  |  Email |Print

The Norwegian krone firmed against the euro Friday after the country’s central bank said it would increase the amount of kroner it will buy on behalf of its sovereign-wealth fund next month, as it seeks to match the currency inflows from the oil sector with the government’s spending needs.
Norges Bank said it would sell the foreign exchange equivalent of 700 million kroner a day ($89.8 million) in February, which is the largest daily amount since the bank started buying kroner in this way last October………………………………………..Full Article: Source

2014 state budget’s revenues hit 18 bln manats

Posted on 30 January 2015 by VRS  |  Email |Print

According to operative data, revenues of Azerbaijan’s state budget amounted to 18.4 billion manats, while expenditures-to over 18.699 billion manats in 2014, Finance Ministry said on January 28. The country’s state oil fund SOFAZ transferred 9.3 billion manats to the state budget as well.
Some 24 percent or 4.5 billion manats of expenditures were used for spending of social means, which is 9.9 percent or 403.9 million manats more compared to 2013……………………………………….Full Article: Source

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