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American Fiscal Chaos Pushes Nations to Pursue Yuan

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qingmingWhile Republicans and Democrats in the United States were taking debt negotiations toward another potential cliff, China was not so silently making deals to bypass using the U.S. dollar when handling bilateral trades.

On October 11th Chinese media Xinhua announced an agreement between the European Central Bank (ECB) and the People’s Bank of China (PBOC) to swap currencies to the tune of 350 billion yuan (US$ 57 billion). According to the report, the agreement will last 3 years but may extend longer if both parties agree to extend it.

The deal marks the second largest currency swap the PBOC has made to date. The first being a 360 billion yuan (US$ 58.7 billion) agreement with South Korea that took place in two waves, first in 2009 and then in 2011. The deal is set to expire in October 2014 barring mutual agreement to keep it active.

The increase in currency swaps between China and other foreign central banks suggests a rise or at least further solidification in trade. However, some Chinese exporters are getting nervous as the yuan is starting to gain ground against the dollar. Further currency appreciation, they fear, could negatively affect exports. Chinese officials in Beijing, on the other hand, seem to welcome the strengthening yuan. A stronger currency could mean increased domestic consumption, the sign of a balanced economy.

Open Currency Swap Agreements – China[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

BlackRock Contemplates Stake in Eurizon

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Asset management giant BlackRock is contemplating purchasing a 30% ownership stake in Intesa SanPaolo’s asset management unit called Eurizon Capital SGR S.p.A. BlackRock is keen on growing its technology business and increase market adoption of its Aladdin platform.

Intesa has been working with UBS to seek out strategic options for Eurizon. Intesa is keen on maintaining control over Eurizon.

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SWFI First Read, June 22, 2018

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JPMorgan Fund Buys 40% of Oxford Properties’ French Portfolio

A fund advised by JP Morgan Asset Management committed €400 million in Oxford Properties’ French portfolio. Essentially, Oxford Properties sold a 49.9% non-managing interest in 32 Rue Blanche, 92 Avenue de France and Paris Bastille. Oxford Properties made its maiden investment in Paris in 2014 when it acquired 32 Rue Blanche.

Oxford Properties is the real estate unit of OMERS.

Temasek Explores Further Cash Commitments to FirstCry

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DOL Fiduciary Role is Struck Down by Fifth Circuit Court of Appeals

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The U.S. Court of Appeal, Fifth Circuit, confirmed a March 15th decision to strike down the U.S. Department of Labor’s (DOL) fiduciary rule. The fiduciary rule is a series of seven different rules that broadly interpret the term “investment advice fiduciary” and redefine exemptions to provisions concerning fiduciaries that appear in the Employee Retirement Income Security Act of 1974 (ERISA). The 5th U.S. Circuit Court of Appeals overturned a decision by a Dallas federal court that had upheld the DOL fiduciary rule.

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