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A Bitter Pill for Emerging Markets

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cloudsSovereign wealth funds have opened their enlarged ears on Ben Bernanke’s spoken words – the word tapering. Central bank actions have contributed volatility in government bond yields which has stressed public investors. A gradual withdrawal of excess liquidity would stem the tide of hot money flowing to emerging markets. This is a wake-up call for institutional investors that have significant exposure to emerging markets. Sovereign funds like Temasek Holdings and Singapore’s GIC have made huge bets in large companies in Southeast Asia, especially in banking. The Abu Dhabi Investment Authority modified their asset allocation to be more accommodative to investments in Latin America and Asia. The China Investment Corporation has been an avid investor, investing in South Africa’s Shanduka Group, paying two billion rand for a stake.

The majority of institutional investors still perceive emerging markets as an asset class, even though each “emerging market” is quite diverse in their makeup. The effect of QE policy will impact each emerging market different.

BRICS
Trouble is brewing in the world of BRICS. Profiting from positive economic growth in recent years, a slowdown in growth will fan the flames of discontent. Nations with current account deficits like Brazil seem to be at most risk for institutional investors. In addition, commodity dependent countries may be vulnerable if China slows down their economic workshop.

Could the decrease in hot money have an impact in Brazil? Inflation in Brazil has caused social tension. The rise in the cost of public transportation augmented the cost of living in Brazil. On June 18, 2013, 50,000 protestors assembled in the streets of Sao Paulo to express frustration at the government.

Ping An Good Doctor Lures Big Public Asset Owners

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Ping An Good Doctor, formerly known as Ping An HealthCare and Technology Company, is a Chinese online healthcare platform that is part of Ping An Insurance (Group) Company. This unit is planning to be offered in a Hong Kong initial public offering that could raise as much as 8.8 billion HKD in shares at 50.80 or 54.80 HKD per share.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Temasek and Schneider Electric Eye L&T Electrical Unit

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Singapore’s Temasek Holdings and France-based Schneider Electric are in talks to acquire Larsen & Tourbo’s electrical and automation business. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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CalPERS Allocates $1 Billion Internally to a Global ESG Strategy

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In February 2018, the California Public Employees’ Retirement System (CalPERS) allocated US$ 1 billion to an internally-managed QSI Global ESG strategy. The internally-managed strategy was developed by New York-based QS Investors, LLC, a subsidiary of Legg Mason. CalPERS entered into a 5-year contract with QS Investors, with a possible spend of over US$ 1 million per annum.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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