Six years after it was announced, Angola’s sovereign wealth fund is fully underway. It has received the final instalment of its $5bn initial endowment and has begun to take its funds out of cash and put them into longer-term investment.
In an interview with FT beyondbrics, José Filomeno Dos Santos (pictured), chairman of the Fundo Soberano de Angola (FSDEA), said that one third of the fund’s assets would be allocated to highly liquid securities such as cash, bonds and listed equities, one third into alternative investments in sub-Saharan Africa, and one third into what he called “opportunistic investments internationally: distressed assets that the fund could take advantage of, spin around and refocus.” Read more
We’ve had Brics and Biits, the Mints and the Fragile Five. It’s now Africa’s term to acquire an investment appellation: the Africa 8.
This refers to the handful of Africa’s 56 countries that Ecobank, the Togo-based pan-African bank, believes will represent the main drivers of the continent in the long term. It’s an eclectic mix: alongside familiar African growth stories like Nigeria, Kenya, Ghana and Cote d’Ivoire are less celebrated countries Rwanda, Mozambique, Angola and – probably the least understood of them all – the Republic of the Congo. Read more
Last week this blog looked at the investment case for Iraq under the headline: “A frontier too far?” So we were struck by a new report today on neighbouring Iran with the opening line: “Iran is beyond the final frontier for portfolio investors.”
One can quibble about which frontier is further but in truth investment in Iran is not so outlandish. The nuclear deal struck between Iran and several world powers in November prompted a renewed look at the investment case for Iran, as has been the case for other markets that have come in from the cold after international isolation, most recently Burma. But in fact, even in isolation, Iran’s capital markets have grown just fine. Read more
There are frontier investment markets, and then there is Iraq. Bombings and fighting killed at least 42 people on Thursday alone, in nine or more separate explosions from Baghdad to Fallujah; yet so commonplace is the violence that the news merited few headlines. After all, at least 24 had died in explosions the previous day.
Yet despite the violence and uncertainty, fund managers and bankers are venturing in to the country, attracted by oil wealth and a surprisingly upbeat outlook for national GDP growth. Read more
Nigeria has been beloved of investors lately, the accessible face of an irresistible rising demographic in sub-Saharan Africa. But it faces challenges, and none more so than the paucity of its infrastructure.
A new report this week by Ecobank spells out just how big that infrastructure gap is, and how it is replicated widely almost everywhere in mid-Africa. And it does so at a vital moment, as Nigeria is about to move to the second stage in its privatisation programme, involving the completion and sale of 10 national integrated power projects (NPPs), with a target of the end of March. Read more
As Argentina’s economy enters crisis mode with the peso crumbling, nobody is watching more closely than the management of Repsol and its shareholders.
On January 29 the Repsol board will meet, as it does on the last Wednesday of every month. On the agenda will be the finer details of a proposal by the Argentinian government to compensate Repsol for having nationalised its controlling stake in Argentina’s biggest oil firm, YPF, in May 2012. Read more
The retirement of Gao Xiqing as president of the China Investment Corporation, China’s sovereign wealth fund, has fund managers wondering what the change of leadership will mean for asset allocation and the fund’s use of external managers.
Gao, one of the CIC’s founders, and instrumental in many of its most well-known (and sometimes ill-fated) deals, is to be replaced by Li Keping, who is the chief investment officer. This is the second change in top leadership positions at CIC in less than a year, with Ding Xuedong becoming chairman of CIC in July 2013. Read more
Partners in wealth
Wednesday’s announcement that Russia and South Korea would work together on an economic project in North Korea slightly overshadowed another significant announcement linked to Putin’s Seoul visit: a new cross-border investment fund between Korea Investment Corporation and its Russian sovereign wealth fund counterpart, the Russian Direct Investment Corporation.
The fund will start out at $500m, with commitments of $250m apiece, but is expected to reach $1bn in time. It also gives an illustration of how the two sovereign wealth funds are evolving. Read more
The UK’s decision to launch an Islamic bond has been a long time coming. For a decade the prospect has been raised at the many Islamic finance conferences that have been held in London; Ed Balls, when he was City of London minister, announced the first Shariah-compliant government bonds from the UK Treasury back in April 2007.
The rationale then, as now, was to bolster London’s standing as an international financial centre. The logic then, as now, was that London ought to offer everything it can to financial markets, and that if launching a sovereign sukuk bond helps to create a benchmark for others to issue against, then that’s what it should do so as not to miss out. Read more
So, ICBC is to become China’s first mainland bank to issue an offshore renminbi bond in London. The launch, which should take place next month, is a further milestone in the development of the renminbi as an international currency, and demonstrates London’s growing role as the European time zone centre for renminbi trading. Read more
China’s biggest bank has launched a landmark deal that will help other Asian banks understand what they will have to pay for regulatory capital under Basel III, the new banking standard.
Industrial and Commercial Bank of China (Asia), the international funding arm of ICBC, the largest bank in the world by both assets and market capitalization, raised $500m this week in a bond issue. The deal is significant as the first tier two dollar bond from Asia to be compliant with the Basel III standards, developed by the Basel Committee on Banking Supervision in 2010 to try to avert a repeat of the global financial crisis. Read more
Asian fund passport plans, to borrow the old cliché, are like London buses: you wait ages for one and then three come at once.
Wednesday’s announcement between the regulatory bodies of Singapore, Malaysia and Thailand to create a system for cross-border distribution of mutual funds was the third in the region this year. Read more
The headlines on Temasek’s annual review, published on Thursday, will likely focus on the 8.86 per cent one-year return and the tripling of the portfolio’s value in 10 years to S$215bn.
But the interesting long-term story at the Singapore state investment company lies in the its asset allocations. Read more
One of the world’s largest fixed income fund managers expects Asia’s growing energy shortage to lead to investment opportunities in the credit markets.
Pimco, the US-based manager with $2.04tn in assets under management worldwide, said in a report released in Hong Kong on Tuesday that more oil and gas companies in Asia would tap the bond market, often to finance acquisitions outside the region as they come to terms with energy shortages caused by declining indigenous resources and increasing domestic consumption. Read more
There is a new man at the top of the China Investment Corporation (CIC), China’s sovereign wealth fund, prompting debate about whether the change in personnel will also mean a change in approach.
Lou Jiwei (pictured), who is still listed in CIC’s website as chairman and chief executive officer, became China’s finance minister in March. His successor has not been formally named but it has been locally reported that he is Tu Guangshao, the executive vice mayor of Shanghai. Read more
The departing chairman and chief executive of the Libyan Investment Authority has said he was about to appoint lawyers to seek compensation from banks including Société Générale and Goldman Sachs – banks he has accused in the past of causing losses worth billions of dollars.
In a wide-ranging interview published in Euromoney magazine, Mohsen Derregia (pictured), who is being ousted from the LIA after just 11 months in the top job, speaks passionately about his removal – which he is challenging – and the importance of the approximately $60bn sovereign fund. Read more
It has become a truism that the Hong Kong property market is overheated. Residential property prices increased 120 per cent between 2008 and February 2013, according to Hong Kong’s Financial Secretary John Tsang, who gave the figure while announcing a sixth round of cooling measures aimed at curbing the relentless growth. But maybe now the moment of the apex has arrived: because Li Ka-Shing (pictured) says so. Read more
What should we make of the appointment of China’s new top securities regulator? The expectations are: stability, predictability, and no great drive for further market reform. But we might all be surprised.
Xiao Gang (pictured), until this week the chairman of the Bank of China, is being interpreted as a cautious new head of the China Securities Regulatory Commission. Read more
The Arab spring seems a world away on the train from Casablana to Rabat. In one compartment a conversation springs up between a local Moroccan, running a machine parts manufacturing business, and a Saudi from a construction company, visiting Rabat to seek migrant labour to help with the booming development in Saudi’s northwest. Cards are exchanged, then brochures; business is done, right here on the rumbling train. Read more