SWFs

Isn’t it a bit late for Ben Bernanke to suggest a preventative measure for the financial crisis? The Fed chair has recommended state-level sovereign wealth funds:

Building a rainy-day fund during good times may not be politically popular, but it can pay off during the bad times Read more

Trillion-dollar mineral deposits apparently found in Afghanistan have the potential to make the country and its citizens comfortable for years to come – but only if wealth generated from the find is handled equitably. Without care, the ‘resource curse’ could trigger conflict, and make most Afghans worse off than they are now.

Ashby Monk suggests creating a sovereign wealth fund straight away, to hold and manage the revenue for future generations. Read more

Oh dear. China’s ‘big four’ commercial banks lent money so willingly in 2009 that their capital adequacy ratios are barely above the statutory minimum of 11 per cent. The Bank of China, for instance, is apparently at 11.14 per cent.

Why should this affect China’s – and, by some accounts, the world’s – largest sovereign wealth fund? Because its domestic arm is the majority shareholder of the ‘big four’*. So China Investment Corporation has asked for a cash injection from the State Council, the country’s cabinet.

That cash would head for Central Huijin Investment Ltd., the domestically orientated Read more

Perhaps for old times’ sake, the inaugural meeting of a new uber-network took place at the Bundesbank in Frankfurt. The next one is being held at the central bank of Kuala Lumpur, and subsequent meetings are planned for Asia, the Middle East and Africa.

The network consists of central banks, sovereign wealth funds, regulators, asset managers and retail banks. Membership is by invitation, and discussions are under the Chatham House rule. Reasons for meeting range from tips on investment strategies to regulation proposals. But one unnamed attendee observed “it ma[de] sense” for buyers and sellers of government bonds to get together. From ft.com:

Central banks and debt management offices are on a charm offensive

 Read more

Please welcome Guoxin Asset Management to the world’s growing family of sovereign wealth funds. But don’t expect to read much more about it: GAM looks set to be exclusively domestic.

China’s state council has apparently approved the fund’s creation, says the Oxford SWF project. It will be owned by China’s SASAC and its purpose is to consolidate 128 state-owned enterprises to about 80 – oh, and make them profitable. The new fund is unlikely to have either mandate or budget to make international investments. Read more

If you can exercise rights by owning just one share of a stock, imagine what you could do with $440bn.

Europe’s largest stock investor – already following quite strict ethical guidelines – is to become more proactive in its pursuit of good. For example, where the Government Pension Fund might previously have excluded a company from its investment universe, it might now use the stock-holding to effect some change. “Active ownership or observation might reduce the risk of continued violations of norms,” says the Finance Ministry statementRead more

Is Norway calling the bottom of global property markets? Its central bank has given approval for its oil-funded sovereign wealth fund to invest up to 5 per cent ($22bn) in the asset class.  “Investments will principally be made in well-developed markets and within traditional types of real estate,” Finance Minister Sigbjoern Johnsen told Reuters. “We must be prepared for real estate prices to fluctuate a good deal.”

Norway has form calling turning points. Last year the fund was allowed to increase its proportion of equity holdings to 60 per cent. During that year, major indices rose about 50 per cent. The fund made 13.5 per cent in Q3 alone. I wonder if they’re planning to reduce the equity proportion now (Bloomberg).

Should the state buy up your pensions and invest them in roads and railways?

The idea is that a US sovereign wealth* fund would dip into public and private pension savings and invest the money in much-needed infrastructure. If it worked, the economy would benefit, infrastructure would benefit, pensions would receive a healthy return and savings would be made for the next generation. Read more

Yes, if rumours are true, China Investment Corporation (CIC) is set to receive a $250bn capital injection, not $200bn as previously thought. The bumper bonus is rumoured to be due before Chinese New Year, February 14.

CIC, which has been active securing energy and other resources, was formed in 2007, and currently has about $300bn under management. Experts say an additional $250bn would take it to the top of the league, above both Norway and Abu Dhabi (even though it doesn’t seem it would from this table).

Norway’s sovereign wealth fund has excluded 17 tobacco producers from its $450bn portfolio for ethical reasons, the government said today. “The divestment of shares in these companies has now been completed,” the finance ministry said.

The central bank-managed Government Pension Fund follows ethical guidelines set by the government and in the past has excluded companies that produce nuclear arms or cluster munitions, damage the environment or abuse human rights or workers’ rights. Read more