Sovereign Wealth Funds

Sovereign Wealth Funds

Postby winston » Tue Jul 17, 2018 7:18 pm

Sovereign Wealth Fund Warning Light Is Flashing

When the world’s biggest investors scale back, everyone should take notice.

By Mark Gilbert

The report suggests that the pickings from private assets are getting slimmer, especially in property and infrastructure, two of the most popular investment classes of recent years.

The total amount allocated globally to private equity — but not yet spent — rose to more than $1 trillion last year.

GIC increased its private equity holdings to 11 percent by the end of the first quarter, up from 9 percent a year earlier.




Source: Bloomberg

https://www.bloomberg.com/view/articles ... gn=markets
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Re: Sovereign Wealth Funds (General News)

Postby winston » Thu Aug 23, 2018 8:13 pm

Sovereign funds pull $5.7 billion from global markets in second quarter

by Claire Milhench

A combination of low oil prices, low bond yields and volatile equity markets has prompted sovereign investors to reduce their exposure to publicly-listed securities in recent years, preferring to ramp up their private equity and real estate holdings instead.

U.S. passively-managed equity funds lost $2.52 billion, while global passive equity strategies lost $1.12 billion.

A survey of sovereign investors by asset manager Invesco published in July, showed more than a third planned to cut their equity exposure over the next three years, with a potential trade war cited as a chief concern.

The eVestment data also showed a chunky $2.38 billion redemption by SWFs from Asia ex-Japan equity strategies.

The largest SWF outflows in the quarter are primarily Chinese names.




Source: Reuters

https://www.reuters.com/article/us-glob ... US%20Money
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Re: Sovereign Wealth Funds (General News)

Postby winston » Thu Aug 22, 2019 6:17 am

Japan’s pension fund warns of global investing losses

LOS ANGELES: Global markets have become so synchronised that money managers risk losing on every front, according to Hiromichi Mizuno, chief investment officer of the world’s largest pension fund.

Japan’s $1.5 trillion Government Pension Investment Fund lost money in equities, fixed-income and currency positions in the last three months of 2018, Mizuno pointed out on Tuesday in Sacramento, California.

"Conventional wisdom of portfolio diversification is when we lose money in equity we make a profit in fixed income, ” Mizuno told the board of the California Public Employees’ Retirement System, the largest U.S. pension.

"But we lost in every single asset classes and lost in the currency translation as well. It never happened in the past.”

The Japan system’s annualised returns were 3.03% from fiscal 2001 to 2018, compared with a more than 6% annual average for Calpers, which has an annual target of 7%. More than half of GPIF’s portfolio was in domestic stocks and bonds as of March 31.

Many Japanese bonds carry negative yields, while the country’s stocks have been falling since a high in January 2018.

GPIF is seeking uncorrelated returns by pushing into private investments, which can make up as much as 5% of its portfolio.

Mizuno said it’s becoming an increasingly crowded trade. Alternative investments accounted for 0.35% of GPIF’s total assets as of the end of June, up from 0.26% at the end of March, according to its latest performance report.

"Everybody is trying to increase the private assets, or like a private investment, because obviously it’s not all correlated to the public market, ” he said.

Source: Bloomberg

https://www.thestar.com.my/business/bus ... qXXLmix.99
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Re: Sovereign Wealth Funds (General News)

Postby winston » Mon Mar 30, 2020 2:55 pm

RPT-ANALYSIS-Oil-rich wealth funds seen shedding upto $225 bln in stocks

By Tom Arnold LONDON, March 29 (Reuters) - Sovereign wealth funds fromoil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a seniorbanker estimates, as plummeting oil prices and the coronavirus pandemic hit state finances.

The rapid spread of the virus has ravaged the global economy, sending markets into a tailspin and costing both oil and non-oil based sovereign wealth funds around $1 trillion in equity losses, according to JPMorgan strategist Nikolaos Panigirtzoglou.

Sticking with equity investments and risking more losses is not an option for some funds from oil producing nations. Their governments are facing a financial double-whammy falling revenues due to the spiralling oil price and rocketing spending as administrations rush out emergency budgets.

Around $100-$150 billion in stocks have likely been offloaded by oil-producer sovereign wealth funds, excluding Norway's fund, in recent weeks, Panigirtzoglou said, and a further $50-$75 billion will likely be sold in the coming months.

"It makes sense for sovereign funds to frontload their selling, as you don't want to be selling your assets at a later stage when it is more likely to have distressed valuations," he said.

Most oil-based funds are required to keep substantial cash-buffers in place in case a collapse in oil prices triggers a request from the government for funding.

In addition to the cash reserves, additional liquidity was typically drawn firstly from short-term money market instruments like treasury bills and then from passively invested equity as a last resort, the source said.

It's generally a similar trend for other funds.

On Thursday, the Norwegian sovereign wealth fund said it had lost $124 billion so far this year as equity markets sunk but its outgoing CEO Yngve Slyngstad said it would, at some point,start buying stocks to get its portfolio back to its target equity allocation of 70% from 65% currently.

[nL8N2BJ24F] Slyngstad also said that any fiscal spending by thegovernment this year would be financed by selling bonds in its portfolio. [nL8N2BJ3S6] DEFENDING THE CURRENCY State-backed, energy-rich funds account for a significant chunk of the roughly $8.40 trillion in total sovereign wealth assets, funds they've built up as a bulwark for when oil revenues dry up.

Sovereign funds have become major players on global stockmarkets, accounting for roughly 5-10% of total holdings, and an important source of income for Wall Street asset managers.

While they have been hit hard by the approximate 20% slide in global equity prices, the oil-based funds' governments in AbuDhabi, Kuwait, Qatar, Bahrain, Saudi Arabia, Nigeria and Angolahave also seen their finances strained by a nearly two thirds drop in oil prices this year.

Gulf sovereign wealth funds could see their assets decline by $296 billion by the end of this year, according to GarbisIradian, chief Middle East and North Africa economist at theInstitute of International Finance (IIF).

Around $216 billion of that fall would be from stock marketlosses and a further $80 billion from drawdowns taken bycash-squeezed governments.

The central banks of Saudi Arabia, the United Arab Emiratesand Qatar have offered a total $60 billion in stimulus, although expectations of tighter liquidity have already pressured Gulfcurrencies, pegged for decades to the U.S. dollar.

[nL8N2B80QA][nL8N2B57RH] "There's a question of whether some of these funds are going to be used to support currencies, as some legal frameworks allowthis," said Danae Kyriakopoulou, chief economist of the Official Monetary and Financial Institutions Forum (OMFIF), a think tank.

"In the previous 10 years some countries moved reserves from their central banks to sovereign funds, allowing them to invest in more risky assets as they have greater flexibility." "Now, that may be a problem, because you have more reserves in the sovereign fund than the central bank when you may need the reserves to defend the currency."

Saudi Arabia is among countries that have in recent years moved reserves from its central bank to beef up its sovereign investment vehicle, Public Investment Fund, which holds stakes in Uber and electric car firm Lucid Motors, and had around $300billion in assets under management in 2019.

In 2015, the last time crude prices collapsed, SaudiArabia's central bank, which then oversaw a larger chunk of the kingdom's investments, mainly in securities such as U.S.

Treasury bonds, ran down its foreign assets by over $100 billion to cover a huge state budget deficit.

This month, Saudi Arabia's Finance Minister Mohammedal-Jadaan said the country would look to borrow to finance its deficit after announcing an economic support package worth more than $32 billion.

Source: Reuters
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Re: Sovereign Wealth Funds (General News)

Postby winston » Thu Apr 02, 2020 8:18 am

World’s biggest wealth fund to liquidate assets

OSLO: Norway’s US$950bil sovereign wealth fund – the world’s biggest – is about to make history as it prepares to liquidate assets to cover government withdrawals.

The crisis triggered by the coronavirus pandemic is playing out very differently for the giant investor than the 2008 great recession. Back then, Norway’s wealth fund used the global sell-off to buy up cheap stocks. This time, the fund will probably need to offload a sizeable chunk of its bond portfolio.

Norway faces its worst economic shock in half a century. With petroleum revenue sharply down, the government has much less income to use on crisis measures. That means it will need to withdraw historic sums from its wealth fund to make ends meet.

While past withdrawals were easily covered by the fund’s cashflow, that’s no longer the case. Companies it invests in are now suspending dividends en masse, in response to the crisis.

Chief executive officer Yngve Slyngstad has already said cashflow this year would be “significantly lower” than previously expected. In 2019, the fund got 243 billion kroner (US$23bil).

Meanwhile, calculations by Bloomberg News showed that Norway’s government will need to pull at least 266 billion kroner from the fund this year (assuming oil prices stay at current levels through 2020).

The situation is quickly deteriorating, and the numbers remain subject to change. A week ago, it looked like government withdrawals would reach just 150 billion kroner, or about US$14bil.

The government’s latest estimates cover a scenario in which the economic crisis triggered by the pandemic lasts two months.

If the fallout continues for another two months after that, the 2020 budget would take a further hit of more than 110 billion kroner, finance minister Jan Tore Sanner said in a letter to Parliament on Monday. That would force the fund to resort to even deeper asset sales.

Meanwhile, a rule requiring the fund to rebalance its portfolio is likely to be triggered yesterday, after the equity portfolio fell about 5 percentage points below a 70% target last week. That meant withdrawals would need to be covered by bond sales, Slyngstad said.

The contrast to 2008-2009 is striking. In the first quarter of 2009, the fund bought 136 billion kroner’s worth of cheap stocks, laying part of the foundation for its spectacular ascent during the decade-long rally that followed.

What’s more, Norway’s petroleum income peaked in 2008, and the government deposited surplus cash into the fund.

Slyngstad, who is due to step down this year after running Norway’s wealth fund for 12 years, has described the period right after the 2008 financial crisis as the “hardest – but also in retrospect the best” of his tenure.

Norway’s fund was set up in the 1990s and invests in stocks, bonds and real estate abroad. The Nordic country has a self-imposed rule to limit spending of oil wealth to 3% of the fund’s value over annual budgets in the long run, with a goal to only spend the return. This year, that’s likely to be at least 3.9%.

The state’s income from oil production (taxes, direct stakes in fields, Equinor ASA dividends) used to cover oil-wealth spending, with the balance being transferred to the wealth fund.

The government had to make its first withdrawals from the fund in 2016 and 2017 after oil prices dropped.

Source: Bloomberg

https://www.thestar.com.my/business/bus ... ate-assets
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Re: Sovereign Wealth Funds (General News)

Postby winston » Sun May 17, 2020 3:17 pm

Saudi wealth fund boosts U.S. holdings with stakes in Citi, Boeing, Facebook

by Saeed Azhar, Kanishka Singh

DUBAI/BENGALURU (Reuters) - Saudi Arabia’s sovereign wealth fund has bought minority stakes in major American companies including Boeing, Facebook and Citigroup, a regulatory filing showed, giving it a portfolio of nearly $10 billion in U.S.-listed stocks.

The $300 billion Public Investment Fund (PIF) has been buying minority stakes in companies across the world, taking advantage of market weakness in the wake of the coronavirus outbreak.

The PIF disclosed stakes worth $713.7 million in Boeing, ABOUT $522 million in Citigroup, $522 million in Facebook, $495.8 million in Disney and $487.6 million in Bank of America, the U.S. Securities and Exchange Commission (SEC) filing bit.ly/3e2A01B on Friday showed.

The PIF has a nearly $514 million stake in Marriott and a small holding in Berkshire Hathaway, according to the filing. The PIF also disclosed an $827.7 million stake in oil company BP, which has American Depository Receipts (ADRs) listed in the United States.

“The Saudi sovereign fund went shopping in Q1,” tweeted Ali Al-Salim, co-founder of Dubai-based consulting firm Arkan Partners, adding that it now held about $10 billion in U.S.-listed equities, up from $2 billion at the start of the year.

PIF’s strategy is two-pronged; building an international portfolio of investments and investing locally in projects that will help reduce Saudi Arabia’s reliance on oil.

“PIF is a patient investor with a long-term horizon. As such, we actively seek strategic opportunities both in Saudi Arabia and globally that have strong potential to generate significant long-term returns while further benefiting the people of Saudi Arabia and driving the country’s economic growth,” the sovereign wealth fund said in a statement.

ENERGY GIANTS
The PIF has separately funded almost half of Japanese investor SoftBank’s $100 billion Vision Fund, which has been hit by losses on technology bets.

Last month the PFI’s head, Yasir al-Rumayyan, said it was looking into investment opportunities in areas such as aviation, oil and gas, and entertainment, adding that there would be a lot of potential for investment opportunities once the coronavirus crisis passes.

The PIF disclosed an 8.2% stake in coronavirus-hit Carnival Corp in April, sending the cruise operator’s shares nearly 30% higher.

The Saudi fund bought stakes in Royal Dutch Shell, Total, Eni and Equinor earlier this year , a source familiar with the transactions told Reuters on April 9.

The SEC filing on Friday showed it had a $483.6 million stake in Shell, a $222.3 million holding in Total and a $481 million stake in Suncor Energy.

An earlier filing in Norway had shown the PIF had a 0.3% stake in oil and gas firm Equinor.

PIF already has a $2 billion stake in Uber Technologies and electric car company Lucid Motors. It used to own a small stake in electric carmaker Tesla, but the latest filing did not show any exposure.

Source: Reuters

https://www.reuters.com/article/us-saud ... 2S0BQ?il=0
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Re: Sovereign Wealth Funds (General News)

Postby winston » Wed Aug 19, 2020 8:19 am

Norway sovereign wealth fund loses US$21b in first half

Norway’s multi-billion pension fund — the largest sovereign wealth fund in the world — reported negative returns for the first half of the year today, citing “major fluctuations” in equity markets, CNBC reports.

The Government Pension Fund Global said it returned -3.4 percent for the first six months of 2020, equivalent to -188 billion kroner (-US$21.3 billion).

“There were major fluctuations in the equity market in this period. The year started with optimism, but the outlook of the equity market quickly turned when the Corona virus started to spread globally,” Deputy CEO of Norges Bank Investment Management Trond Grande said in a statement.

“However, the sharp stock market decline of the first quarter was limited by a massive monetary and financial policy response.”

The fund’s total market value at the end of the six months was 10.4 trillion kroner, with 69.6 percent invested in equities, 27.6 percent in fixed income and 2.8 percent in unlisted real estate.

Its equity investments fell by -6.8 percent and its real estate returned -1.6 percent over the first half, although its fixed-income investments grew by 5.1 percent.

According to the Sovereign Wealth Fund Institute, Norway has the largest wealth fund in the world, when ranked by total assets, followed by the China Investment Corporation and Abu Dhabi Investment Authority.

The fund, which saves revenue from the oil and gas industry, is worth roughly three times Norway’s annual gross domestic product and is pivotal to the Nordic country’s finances.

Norway’s central bank, also known as Norges Bank, said in its half-year report the year began “optimistically,” due in part to expectations of healthy growth in the real economy.

However, as the coronavirus outbreak began to spread worldwide, the bull market ended abruptly, and financial markets were hit by a series of liquidity shocks.

The Norwegian fund said it saw negative returns in most markets through to the end of June, with North America stocks, which accounts for almost 44 percent of its equity portfolio, slipping by 2.6 percent over the period.

European stocks returned -11.7 percent for the first half of 2020 and accounted for 31.6 percent of the fund’s equities.

Stocks in the Asia-Pacific region returned -4.6 percent and made up 23 percent of the fund’s equity investments. Meanwhile, emerging markets returned -7.3 percent and accounted for 11.5 percent of the portfolio.

Oil and gas stocks were the worst performers for the first half of the year, with a return of -33.1 percent. “This was due mainly to a slide in oil prices in the first quarter as a result of both weak demand on account of the pandemic and an increase in supply from Saudi Arabia,” the fund said.

Conversely, tech stocks were the period’s best performers with a positive return of 14.2 percent.

Source: The Standard

https://www.thestandard.com.hk/breaking ... first-half
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Re: Sovereign Wealth Funds (General News)

Postby winston » Wed Feb 24, 2021 7:33 am

Sovereign wealth funds pull US$16.3 bil from market strategies in Q4

by Tom Arnold

Source: Reuters

https://www.theedgemarkets.com/article/ ... ategies-q4
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Re: Sovereign Wealth Funds (General News)

Postby winston » Tue Dec 28, 2021 6:51 am

Norway wealth fund CEO sees market weakness

The head of Norway’s US$1.4 trillion (RM5.9 trillion) wealth fund says he expects a lengthy period of weakness in financial markets and warned that inflation could be the most significant challenge ahead.

After achieving an average rate of return of 6% for a quarter century, the fund is now preparing for “a decade of lower returns.”

It has a portfolio of about 9,000 stocks and has exited hundreds of companies over the past decade to avoid the environmental, social and governance risk it says they represented.


Source: Bloomberg

https://www.thestar.com.my/business/bus ... t-weakness
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Re: Sovereign Wealth Funds (General News)

Postby winston » Sat Jan 01, 2022 7:56 pm

SWF and public pension fund assets hit record $31.9 trillion - report

By Karin Strohecker

Assets managed by sovereign wealth funds rose 6% over the year to $10.5 trillion, while those of public pension funds jumped 9% to $21.4 trillion.


Source: Reuters

https://www.reuters.com/markets/europe/ ... 022-01-01/
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