Country --- fund-------------------Amount(USD Bn)------Inception
UAE-------- Abu Dhabi Inv. Auth(ADIA)-- 875-----1976
Singapore--Govt. Sing. Inv. Corp.------ 330-----1981
Norway-----Govt. Pension Fund Global----322-----1990
Saudi Arabia-Various Funds--------------300-----NA
Kuwait-----Kuwait inv. Authority--------250-----1953
China------China Inv. Co. Ltd.----------200-----2007
Hong Kong--Hong Kong Mon. Aut. Inv.Por--140-----1998
Russia-----Stab.Fund. Russian Fed.------127-----2003
China------Cen. Hujin Inv. Corp.--------100-----2003
Singapore--Temasek Holdings-------------108-----1974
Sovereing Wealth Fund Concept
http://nrao-mgmt-smi-handbook.blogspot.com/2007/11/sovereign-wealth-management-2007.html
Showing posts with label Sovereign wealth-fund. Show all posts
Showing posts with label Sovereign wealth-fund. Show all posts
Wednesday, August 27, 2008
Thursday, February 7, 2008
China's state investment company to invest $5 bln in Morgan Stanley
China's state forex investment company to invest $5 bln in Morgan Stanley
December 2007
China Investment Corp. (CIC), the nation's state-owned forex investment firm, said that it has agreed to invest 5 billion U.S. dollars in the No. 2 U.S. investment bank Morgan Stanley.
It will purchase equity units that are mandatorily convertible into 9.9 percent of Morgan Stanley common shares.
The equity units carry a fixed annual interest rate of nine percent before conversion on Aug. 17, 2010.
Morgan Stanley reported a larger-than-expected loss in the fourth fiscal quarter due to a 9.4-billion-U.S. dollar write down from its exposure to subprime and other mortgage-related investments.
It lost 3.61 billion U.S. dollars in the fourth quarter, compared to a profit of 2.27 billion U.S. dollars in the same period a year earlier.
"CIC believes that Morgan Stanley has potential for long-term growth, particularly in its investment banking, asset management and wealth management businesses, as well as new business development opportunities in emerging markets," said the statement.
China Investment Corp. was set up in September this year, with an initial capital of 200 billion U.S. dollars from the country's massive foreign exchange reserves.
One-third of the capital would be used to purchase Huijin Investment Co. an investment arm of the Chinese government, and another third would be injected into state-owned banks for shareholding reforms, CIC chairman Lou Jiwei said.
The remaining 70 billion U.S. dollars was earmarked for overseas investment in a wide range of portfolios but would not seek control, he said.
Earlier this month, CIC made its second investment this year of about 100 million U.S. dollars in the initial public offering of the China Railway Group in Hong Kong.Its first investment is 3 billion U.S. dollars in Blackstone group public offering.
http://news.xinhuanet.com/english/2007-12/19/content_7281666.htm
December 2007
China Investment Corp. (CIC), the nation's state-owned forex investment firm, said that it has agreed to invest 5 billion U.S. dollars in the No. 2 U.S. investment bank Morgan Stanley.
It will purchase equity units that are mandatorily convertible into 9.9 percent of Morgan Stanley common shares.
The equity units carry a fixed annual interest rate of nine percent before conversion on Aug. 17, 2010.
Morgan Stanley reported a larger-than-expected loss in the fourth fiscal quarter due to a 9.4-billion-U.S. dollar write down from its exposure to subprime and other mortgage-related investments.
It lost 3.61 billion U.S. dollars in the fourth quarter, compared to a profit of 2.27 billion U.S. dollars in the same period a year earlier.
"CIC believes that Morgan Stanley has potential for long-term growth, particularly in its investment banking, asset management and wealth management businesses, as well as new business development opportunities in emerging markets," said the statement.
China Investment Corp. was set up in September this year, with an initial capital of 200 billion U.S. dollars from the country's massive foreign exchange reserves.
One-third of the capital would be used to purchase Huijin Investment Co. an investment arm of the Chinese government, and another third would be injected into state-owned banks for shareholding reforms, CIC chairman Lou Jiwei said.
The remaining 70 billion U.S. dollars was earmarked for overseas investment in a wide range of portfolios but would not seek control, he said.
Earlier this month, CIC made its second investment this year of about 100 million U.S. dollars in the initial public offering of the China Railway Group in Hong Kong.Its first investment is 3 billion U.S. dollars in Blackstone group public offering.
http://news.xinhuanet.com/english/2007-12/19/content_7281666.htm
Sunday, November 18, 2007
Sovereign Wealth Management 2007
Sovereign wealth funds offer longer-term investment horizon compared with traditional reserve portfolios, assuming higher tolerance for short-term risk. Therefore, a more diversified and less conservative asset allocation is possible – constructing a more efficient portfolio that could include illiquid asset classes. Illiquid assets should offer meaningful premium over more liquid asset classes, as have been demonstrated by some notable U.S. college endowments. What’s more, compared with traditional reserves management, sovereign wealth funds can be
more active in moving into high-growth markets. This increased level of access into high-growth economies should make noticeable differences in terms of returns over the years.
And this new opportunity set is not small. By the end of 2040, according to Goldman Sachs research, the combined GDP of BRICs and Mexico will be bigger in dollar terms than that of the G7 economies. Sovereign wealth funds may also pursue to diversify the sources of long-term wealth. They may try to optimize their portfolios with respect to characteristics of their national economies, such as seeking strategic ownership positions in important foreign enterprises. For example, one could
choose to invest in strategic resources which the country lacks. And for countries with abundant human capital and manufacturing capabilities but with little resources, it may make sense for them to invest in natural resources to diversify their national portfolios.
Challenges in sovereign wealth management in 2007
First, global financial market conditions may have become less favorable to new investors. Valuations are at or near historic highs, and global liquidity has pushed up prices in all asset sectors, including equities and commodities. Bond yields are now higher after the lows seen in 2005. Credit spreads remain extremely tight.
Though the global economic environment is still benign and solid expansion of the global economy is most likely in coming years – as suggested by the IMF’s latest report, downside risks for financial markets may be increasing, as the cyclical factors contributing to the low volatility environment could reverse. The visibility of financial losses means that the public is more likely to focus on them should they occur, and this could pose serious reputation challenges to newly-established sovereign wealth funds.
Second, there are risk management challenges. Sovereign wealth funds need to have a
different approach to risk from that of traditional reserves management as the fund moves into non-traditional asset classes.
And yet, it is often difficult to find good data with sufficient history for certain asset classes. And analyzing the market behavior of expanded set of asset classes and finding correlations among them are much more difficult. Moreover, the characteristics of the market indices used to represent alternative asset classes change rapidly, further compromising the usefulness of the historical asset class record. Therefore, sovereign wealth funds need to develop a new modeling approach to confidently monitor and control the market risk of their portfolio assets
Third, a well-defined mandate is crucial to successful management of funds. Problems arise when mandates are poorly defined – leading to bitter arguments about its proper uses. And this problem is acute especially in developing countries, where it is tempting to fund government expenditures. In addition, agreement on the risk/return profile of a fund can sometimes be very difficult if there are differences in views on the characteristics of the fund’s future liability.
There is another issue – that is, the potential emergence of so-called ‘financial protectionism’. The relationship with recipient countries could get more complicated when sovereign wealth funds show particular interest in other countries’ highly strategic industries. How they might react is unclear.
Possible expansion of financial protectionism could bring about adverse effects on the still on-going globalization process – one of major factors bringing global prosperity.
Size
The total size of sovereign wealth funds could now be as large as USD 2.5 trillion, according to a recent research by Morgan Stanley. The funds derived from oil and gas export proceeds account for some two thirds of the total, with the rest consisting of funds mainly controlled by the Asian exporters. The sovereign wealth funds are expected to double in size before 2010 and reach USD 10 trillion mark before 2014. It could well surpass the size of the world’s total official reserves in the not-too-distant future, and will have powerful implications on the global financial markets.
One of implications is apparent portfolio shifts from the sovereign bond markets to more risky asset markets in coming years. Global currency, commodity and debt market may experience huge changes, and it could cause significant challenges to the global financial market conditions over the years.
Opportunity or challenge it may be, this is clearly an ongoing trend on the global scale, and we should be on the lookout for their broader implications as global investors.
more active in moving into high-growth markets. This increased level of access into high-growth economies should make noticeable differences in terms of returns over the years.
And this new opportunity set is not small. By the end of 2040, according to Goldman Sachs research, the combined GDP of BRICs and Mexico will be bigger in dollar terms than that of the G7 economies. Sovereign wealth funds may also pursue to diversify the sources of long-term wealth. They may try to optimize their portfolios with respect to characteristics of their national economies, such as seeking strategic ownership positions in important foreign enterprises. For example, one could
choose to invest in strategic resources which the country lacks. And for countries with abundant human capital and manufacturing capabilities but with little resources, it may make sense for them to invest in natural resources to diversify their national portfolios.
Challenges in sovereign wealth management in 2007
First, global financial market conditions may have become less favorable to new investors. Valuations are at or near historic highs, and global liquidity has pushed up prices in all asset sectors, including equities and commodities. Bond yields are now higher after the lows seen in 2005. Credit spreads remain extremely tight.
Though the global economic environment is still benign and solid expansion of the global economy is most likely in coming years – as suggested by the IMF’s latest report, downside risks for financial markets may be increasing, as the cyclical factors contributing to the low volatility environment could reverse. The visibility of financial losses means that the public is more likely to focus on them should they occur, and this could pose serious reputation challenges to newly-established sovereign wealth funds.
Second, there are risk management challenges. Sovereign wealth funds need to have a
different approach to risk from that of traditional reserves management as the fund moves into non-traditional asset classes.
And yet, it is often difficult to find good data with sufficient history for certain asset classes. And analyzing the market behavior of expanded set of asset classes and finding correlations among them are much more difficult. Moreover, the characteristics of the market indices used to represent alternative asset classes change rapidly, further compromising the usefulness of the historical asset class record. Therefore, sovereign wealth funds need to develop a new modeling approach to confidently monitor and control the market risk of their portfolio assets
Third, a well-defined mandate is crucial to successful management of funds. Problems arise when mandates are poorly defined – leading to bitter arguments about its proper uses. And this problem is acute especially in developing countries, where it is tempting to fund government expenditures. In addition, agreement on the risk/return profile of a fund can sometimes be very difficult if there are differences in views on the characteristics of the fund’s future liability.
There is another issue – that is, the potential emergence of so-called ‘financial protectionism’. The relationship with recipient countries could get more complicated when sovereign wealth funds show particular interest in other countries’ highly strategic industries. How they might react is unclear.
Possible expansion of financial protectionism could bring about adverse effects on the still on-going globalization process – one of major factors bringing global prosperity.
Size
The total size of sovereign wealth funds could now be as large as USD 2.5 trillion, according to a recent research by Morgan Stanley. The funds derived from oil and gas export proceeds account for some two thirds of the total, with the rest consisting of funds mainly controlled by the Asian exporters. The sovereign wealth funds are expected to double in size before 2010 and reach USD 10 trillion mark before 2014. It could well surpass the size of the world’s total official reserves in the not-too-distant future, and will have powerful implications on the global financial markets.
One of implications is apparent portfolio shifts from the sovereign bond markets to more risky asset markets in coming years. Global currency, commodity and debt market may experience huge changes, and it could cause significant challenges to the global financial market conditions over the years.
Opportunity or challenge it may be, this is clearly an ongoing trend on the global scale, and we should be on the lookout for their broader implications as global investors.
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