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5 Fears and Dreams by Sovereign Funds Regarding Trump’s America

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Will Donald Trump’s proposed policies drive up U.S. consumer and business spending – a number of large sovereign funds think so? Could the U.S. reach 4% GDP growth in 2017?

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On January 16th, the International Monetary Fund (IMF) raised its forecast for the United States over the next two years. Why? The IMF believes Donald Trump’s business policies could be a boon for American economic growth. However, the IMF warned publicly that Trump’s protectionist trade proposals could provoke trade wars, a scary scenario for global sovereign wealth investors. Other concerns by public funds include how a rise in U.S. interest rates could impact asset prices and rapid currency movements in the U.S. dollar.

U.S. Shifting from Monetary Policy Toward Fiscal Policy

During the global financial crisis of 2008, wealth funds were opportunistic, deploying cash to scoop up distressed companies and assets. As quantitative easing (QE) policies dragged on in Japan, the U.S. and Europe, public funds grew frustrated in finding suitable investments. Under U.S. President Barack Obama, the low-yield environment was greatly prolonged, forcing sovereign investors to desire private markets over public markets. Wealth funds like the Abu Dhabi Investment Authority (ADIA) have increased allocation toward private credit funds, while funds like Australia’s Future Fund committed to high-yield funds managed by firms like Haymarket Financial, Oaktree Capital Management and Westbourne Credit Management Limited. Wealth funds are anxious to see Trump’s implementation of possible tax cuts, proposed infrastructure plan and de-regulation in certain industries which could summon animal spirits.

Infrastructure Dreams

Faced with low returns in public markets and seeking to lockup intergenerational capital, sovereign funds from Asia and the Gulf region are keen on U.S. infrastructure. They are waiting for national plan. For example, publicly, both the China Investment Corporation (CIC), Qatar Investment Authority (QIA) and Kuwait Investment Authority (KIA) have indicated a preference to invest in U.S. infrastructure both greenfield and brownfield.

Fear of Protectionism and Trade Restrictions

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Nomura and CIC Contemplate Joint Investment Fund

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Japan-based Nomura Holdings is in talks with the China Investment Corporation (CIC) on forming a new investment fund. The fund could be receive commitments up to US$ 1 billion. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Temasek Holdings Dumps More of Celltrion

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On October 22, 2018, Singapore’s Temasek Holdings, through its sovereign wealth enterprise (SWE) Ion Investments, entered into its second block deal in selling shares in Celltrion, a South Korean bio-pharmaceutical company. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Alleged Fraud, Data Breaches, and Bias, Plague Facebook

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In an unfortunate break for Facebook, the true nature of its data breach is more troubling than previously believed. The social media giant revealed that its headline-topping security breach, which affected 29 million accounts, compromised personal information and seemingly confidential contact information. The FBI is said to be investigating. In September 2018, the story broke that user content, email, and phone numbers, along with personal profile information, was swiped from the site. Facebook has admitted the problem, but stopped short of offering users an apology. The U.S. Federal Trade Commission (FTC) and the Irish Data Protection Commission have questioned Facebook on the matter.

Access Tokens

At the root of the breach were Facebook “access tokens.” These are digital keys that give sites access to keep users logged in and to recognize them upon entry. Unknown hackers reportedly stole these access tokens for 400,000 people. They then used “friends lists” to steal tokens from their networks. Facebook did not shy away from noting that unauthorized access “included username, gender, locale/language, relationship status, religion, hometown, self-reported current city, birthdate, device types used to access Facebook, education, work, the last 10 places they checked into or were tagged in, website, people or Pages they follow, and the 15 most recent searches.” This is, clearly, a staggering amount of personal information and a black eye for the corporation.

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