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2 Reasons Why China Recently Dumped Treasuries

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December Treasury International Capital (TIC) data was semi-calamitous for the United States Treasury due to China’s year-end retraction of Treasuries. Maintaining quantitative easing and stepping in, the Federal Reserve became the largest financier of the U.S. government’s deficit in 2013. In total, the U.S. government issued a net US$ 759 billion in Treasury securities to the public with the Federal Reserve buying a net US$ 543 billion of that amount.

The CIC’s new chairman and CEO, Ding Xuedong, reiterated in talks with the American press that he believes infrastructure investments will be a major theme in all markets.

The largest foreign creditor of the United States is China. Holdings of U.S. Treasuries by China fell by the highest magnitude in 2 years, offloading some US$ 48 billion in paper. These levels of Beijing’s Treasury holdings mimic March 2013 figures. To fill the void at year-end, Belgium (some say as a European Union proxy) greatly augmented Treasury purchases which led to aggregate growth in moving foreign holdings to US$ 5.79 trillion.

SAFE and TIC data
Sources: China’s State Administration of Foreign Exchange and U.S. Treasury TIC Data

#1 Diversification – Fear of Rising Rates

Clearly, Beijing is attempting to diversify its reserves from holding government debt, especially U.S. debt. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Angolan Government Cancels Port Concession, Reviews Others

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Atlantic Ventures SA, which has ties to Isabel dos Santos (daughter to former Angolan president,) lost its concession rights to construct a US$ 1.5 billion port – the Barra do Dande port – near Luanda. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Egyptian Parliament Passes Draft Law on Misr Fund

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Egypt’s state news agency revealed the country is forming a sovereign wealth fund with initial capital of 5 billion Egyptian pounds, with 1 billion Egyptian pounds of that amount being immediately transferred from the Egyptian public treasury. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Capital Constellation Backs Middle Market PE Platform

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Capital Constellation is the investment platform owned by the Alaska Permanent Fund Corporation (APFC), RPMI Railpen, and Wafra Inc. on behalf of the Public Institution for Social Security of Kuwait (PIFSS). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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