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Archived News - July 2008
7/29/2008
The Qatari Investment Authority has emerged as a potential new bidder for Land Securities' #1.4bn outsourcing arm Trillium. The Daily Telegraph has learned that QIA has replaced the Investment Corporation of Dubai in a consortium which includes property fund manager AIM. The interest in Trillium comes despite QIA's failed bid for Sainsbury's last year and reports that it has made a significant loss on its investment in care home operator Four Seasons. According to sources close to the bidding process, the new partners have been given a week to come up with a bid that could trump the existing #850m offer made two weeks ago by a consortium led by the Pears' family-owned business Telereal and its bidding partners, Australian bank Macquarie.
read more: Telegraph
7/23/2008
According to the GE website and sources, GE Chairman and Chief Executive Officer Jeff Immelt and Mubadala Chief Executive Officer and Managing Director Khaldoon Al Mubarak sign a global business partnership.
read more: Press Release
read more: General Electric
7/22/2008
Reporting by Steven C. Johnson and Gertrude Chavez-Dreyfuss
The trouble at U.S. mortgage giants Fannie Mae and Freddie Mac may discourage state-run investment funds from buying U.S. dollar-denominated assets but the euro is not likely to be the main beneficiary. Instead sovereign wealth funds, controlling over $3 trillion in assets, are likely to turn to investments in Asia, a move likely to push the U.S. dollar lower against Asian currencies including the Japanese yen.
Authorities in Kuwait this week said the state's sovereign wealth fund, which manages its massive petro-dollar assets, will not buy future Fannie or Freddie debt, opting instead to boost investments in stocks, bonds, and real estate in China, India and Japan.
Recent experience with investing in U.S. financial stocks may give fund managers pause. Since taking a $3 billion stake in U.S. private equity firm Blackstone Group in 2007 and a $5 billion stake in Morgan Stanley this year, China Investment Corporation has taken sizable losses on the value of their investments. After sinking $5 billion into Merrill Lynch when shares were trading around $48, Singapore's Temasek Holdings TEM.UL has watched Merrill's shares dive to about $30.
"Sovereign wealth funds that invested in U.S. banks have lost 30 to 50 percent of their investments in the space of six months, so they're becoming more cautious," said Nouriel Roubini, business professor at New York University's Stern School of Business and head of Roubini Global Economics.
In addition, the fear that more mortgage market losses at U.S. banks will force the Federal Reserve to reduce U.S. interest rates again later this year may spell even more trouble for the U.S. dollar. But Ashraf Laidi, chief market strategist at CMC Markets in New York, said the trend away from the U.S. dollar will outlive the current U.S. market turmoil.
"It's not only reflective of the negative current in the U.S. economy right now, which will turn around at some point, but is also about the increasing investment opportunities around the world, especially in Asia," he said.
Until now, the U.S. dollar's decline has been mostly against the euro and other European currencies. Since the start of 2006, the euro has gained nearly 30 percent against the dollar. Against the Japanese yen, the dollar has lost just 9.0 percent, and losses against managed currencies such as China's yuan have been even more modest.
Of course, it's tough to know what funds are doing, as most do not disclose their asset holdings, said Carl Linaburg, vice president of the Sovereign Wealth Fund Institute, a California research group. Most, he added, are long-term investors and still concentrated in fixed income.
There's also a strong incentive for oil-rich Gulf states to step up purchases of non-dollar assets, said Laidi.
read more: Thomson Reuters
Carl Linaburg: A few things to clarify about my comments in the above news article from Thomson Reuters. While it is true that most sovereign wealth funds do not disclose their company holdings, a large chunk of the ones that do are held in the occident. A number of occidental sovereign wealth funds may be categorized as contingent pension reserve funds by the IMF and are regulated by the laws where they reside. Furthermore, these types of funds have some weight in fixed income (aside from the Australia Future Fund, with 4% of their total portfolio of US$ 58.5 Billion) revealed in our asset allocation section of the Sovereign Wealth Quarterly. Example:
Another item to note regarding the Reuters article is the speculation that government authorities will move their investments focused in Asia. Earlier this month (July 8th) GPF-G Norway announced plans to shift 5 percent of its equities investments to secondary markets such as Egypt and Peru and increase its exposure in Asia which is currently the lowest weight of their portfolio, categorized as Asia/Oceania at 11% - right below Americas/Africa at 35%.
7/15/2008
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7/9/2008
The fund continues greater international diversification by allocating its portfolio into emerging markets. This will include countries such as Egypt, Morocco, and Peru.
Thomson Reuters reports, "Norway's almost $400 billion sovereign wealth fund wants to increase its exposure to emerging markets and Asia as it aims for a long-term real return of 4 percent a year, said a finance ministry official on Tuesday.
Martin Skancke, director-general at Norway's Ministry of Finance, told Reuters the government fund wants to invest five percent of its equities portfolio in secondary emerging markets such as Egypt and Peru."
read more: Thomson Reuters
7/8/2008
On Friday Newcastle maintained that reports of the club being offered to the New York-based finance company InterMedia Partners for #420m were "absolute nonsense" but a day later a spokesman for the US private equity firm made a conflicting statement. "InterMedia was approached about a deal, made no offer and has no interest," he said. Twenty-four hours on from InterMedia's admission of an approach from Tyneside, it was reported that the Saudi Binladen Group (SBG), a Jeddah-based, multinational construction company whose chief executive, Bakr bin Laden, is the half-brother of the world's most wanted man, is pondering a potential #300m bid for Newcastle. Meanwhile the Abu Dhabi Investment Authority (ADIA) is also believed to be considering making an offer.
read more: Guardian UK
7/6/2008
A number of Japanese politicians want the public pension fund to diversify from its holdings in domestic debt into more risky asset classes. Risk and market size must be taken into account. Many critics believe that losses could incur as financial volatility is increasing. If the fund were started today with the 10 trillion yen as planned, it would be around US$93.6 billion in size. In addition, Japan is 2nd in the world compared to China as holding the most foreign exchange reserves.
According to Thomson Reuters, "Japan's Liberal Democratic Party is set to call for a 10 trillion yen sovereign wealth fund using public pension funds, the Nihon Keizai Shimbun financial daily reported on Wednesday.
The LDP proposal envisions a government asset manager handling the public pension fund's assets, the report said, without quoting sources.
The report comes amid calls for Japan's $1.44 trillion state-run Government Pension Investment Fund (GPIF) to diversify its holdings, including investments in alternative assets, to seek higher returns."
read more: Thomson Reuters
7/2/2008
NYSE Euronext will purchase a 25% stake in the DSM for $250m in cash which represents the largest investment ever made by NYSE Euronext in a foreign exchange. The State of Qatar will retain ownership of the remaining 75% of the DSM through the Qatar Investment Authority. The closing of the transaction is expected to take place early during the fourth quarter of 2008. Latham & Watkins LLP represents the Qatar Investment Authority in this transaction.
read more: AME Info
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