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Sovereign Wealth Funds Briefing 31.Aug 2012

Posted on 31 August 2012 by VRS |  Email |Print

Low nominal rates and the end to so-called “risk free” investing is adding to the growing pressure on sovereign wealth funds (SWFs) to perform. Relative to pre-2008 levels, official institutions which hold some $10tn in foreign exchange reserves lose approximately $250bn a year. This reality is forcing sovereign wealth funds to critically examine their investments and look for ways to recapture some of those losses.
“Managers of public wealth have been impacted by the crisis like every other investor, institutional and individual. They have realized that there are no longer assets that are entirely risk free. They are under huge pressure to find more income; since 2008, because of the decline in nominal rates, they are earning hundreds of billions of dollars less,” explains Terrence Keeley, Global Head of BlackRock’s Official Institutions Group,in an interview with Opalesque………………………………………..Full Article: Source

Posted on 31 August 2012 by VRS |  Email |Print

Glencore International PLC’s effort to form the world’s fourth-largest mining conglomerate by merging with Xstrata PLC edged closer to collapse Thursday, after Xstrata’s second-largest shareholder, sovereign-wealth fund Qatar Holding LLC, said it would vote against the deal, based on the current offer.
In its second public statement since Glencore and Xstrata announced plans to merge into a mining juggernaut with a market capitalization of about $70 billion, Qatar Holding said it “has determined that it will not support the proposed merger terms of 2.8 new Glencore shares for every one existing Xstrata share…although it continues to support the principle of a combination of Glencore with Xstrata.”……………………………………….Full Article: Source

Posted on 31 August 2012 by VRS |  Email |Print

The Qatari sovereign wealth fund, the second-largest shareholder in Xstrata behind Glencore, said yesterday it will block the mega-merger between the two commodity giants.
Qatar has been fighting for an improved ratio on the 2.8 shares for every one existing Xstrata share offered by Glencore in February. It said in June that a ratio of 3.25 would better reflect the benefits of the merger. Glencore has so far resisted calls to up the share ratio, with chief executive Ivan Glasenberg calling the 2.8 ratio a “fair” deal………………………………………..Full Article: Source

Posted on 31 August 2012 by VRS |  Email |Print

Kazakhstan’s government expects assets held by its sovereign wealth fund to more than double to $100 billion by 2015, Economic Development and Trade Ministry said in a statement distributed today in the capital, Astana.
The value of assets held by the National Oil Fund reached $53.3 billion in July, the Central bank said Aug 6. Kazakhstan, which holds about 3 percent of the world’s oil reserves according to BP Plc, created the National Oil Fund in 2000 to guard against declines in the price of crude. The fund holds 80 percent of its assets in bonds and 20 percent in stocks, the central bank said in November 2010, Kazinform has learnt from Bloomberg………………………………………..Full Article: Source

Posted on 31 August 2012 by VRS |  Email |Print

The proposal for a more ethical Future Fund could be better, says James Rose, but investors should join the conversation rather than throw their arms up in horror. Not for the first time, the Greens have caused some hubristic harrumphing from the business sector with an idea that shines a light into an area Big Business would rather remain darkened.
The latest Greens missile is from Senator Richard Di Natale, and it concerns the marrying of social conscience and moral values with hard business………………………………………..Full Article: Source

Posted on 31 August 2012 by VRS |  Email |Print

Thermal coal company Bumi Resources has signed a pact to sell its entire 50% stake in unlisted coal unit PT Fajar Bumi Sakti for $200 million, people involved in the deal told Dow Jones Newswires on Friday, as it sheds assets to pay off some of its debt.
The move comes days after Bumi Resources reported that it swung to a net loss of $322 million in the first-half of 2012, raising concerns on how it will repay the $1.3 billion worth of loans it owes China Investment Corp., or CIC. A banker on the deal said Bumi Resources will use the proceeds from the stake sale to repay $600 million of its total loans from CIC………………………………………..Full Article: Source

Posted on 31 August 2012 by VRS |  Email |Print

Alabama Trust Fund Board, Montgomery, is searching for a global custodian, according to an RFP posted on the Alabama state treasurer’s website.
The selected firm would provide global custodial and securities lending services for the $2.3 billion Alabama Trust Fund and the $417 million County Municipal Government Capital Improvement Trust Fund………………………………………..Full Article: Source

Posted on 31 August 2012 by VRS |  Email |Print

Sovereign wealth funds are building risk monitoring systems based on warning signs such as rising commodity prices to help them reduce the risk in their portfolios in advance of market shocks, according to a panel of experts.
Sung Cheng Chih, former chief risk officer for the government of Singapore Investment Corporation (GIC) and currently a consultant to several sovereign institutions, said: “The financial crisis highlighted the importance of preparing for contingencies, with some funds now seeking to create risk dashboards based on pre-agreed signals for portfolio de-risking.”……………………………………….Full Article: Source

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