Sovereign 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.
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.
Atlas Merchant Capital LLC and Singapore’s GIC Private Limited acquired just under a 25% equity stake in Dresher, Pennsylvania-based Ascensus, the largest independent recordkeeping services provider, third-party administrator, and government savings facilitator in the United States. San Francisco Genstar Capital LLC and New York-based Aquiline Capital Partners LLC were the sellers of the shares in Ascensus and will maintain control over the company.
Atlas Merchant Capital LLC was founded by Bob Diamond and David Schamis. Diamond is the former group chief executive of Barclays plc.
GIC is an investor in Alight Solutions, a provider of human capital solutions.
Barclays acted as the lead financial advisor and J.P. Morgan acted as financial advisor to Ascensus in connection with this transaction. Willkie Farr & Gallagher LLP acted as legal counsel to Ascensus.
Debevoise & Plimpton LLP acted as legal counsel to Atlas Merchant Capital and Sidley Austin LLP acted as legal counsel to GIC.
In 2015, JC Flowers sold Ascensus to Genstar Capital and Aquiline Capital Partners.
The Value of Research: Skill, Capacity, and Opportunity
This article is sponsored by S&P Dow Jones Indices.
How much should a portfolio manager be willing to pay for research? The question is of importance to any manager, but has become particularly pertinent since newly imposed European rules require that the costs of investment research—previously offered by many investment banks as an in-kind consideration in return for brokerage business—be unbundled from trading.
Unfortunately, attempts to determine a fair value for research in the most general circumstances are doomed to fail. Even if we only consider direct recommendations to buy or sell certain securities, the value of such recommendations to a portfolio manager will vary according to the absolute size of positions taken in response. Instead, we provide a framework for estimating relative research values across markets and constituents, under certain stylized (but reasonable) assumptions.
REPORT: The Value of Research: Skill, Capacity, and Opportunity
Malaysia’s Khazanah Nasional Berhad is prepping to declare more than 1 billion MYR in a dividend payout to the Malaysian government for 2019. Khazanah Nasional is undergoing a significant strategy shift to focus more on domestic assets, while selling off venture tech investments, overseas real estate, fund investments, and other non-strategic assets. The wealth fund also plans to scale back its overseas presence in markets such as San Francisco and London.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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