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Are Institutional Investors Out of the Woods?

As institutional investors glaze over inflation expectations, many are mystified with the recent global equity rally.

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Wasn’t post-Brexit supposed to deliver a wave of chaos to markets? Should investors thank the Bank of England for its recent actions or was there over-panic regarding Brexit? Astonishingly, the Citi G10 Economic Surprise Index has risen to recent highs against the setting of one of the most significant political-economic events, according to the plethora of financial media commentators. The index measures data releases versus economists’ prior expectations. When data comes in weaker than expected, the index declines. When data comes in stronger than expected, the index inclines. Helsinki-based Etera Mutual Pension Insurance Company posted a 1.3% return for the first half of 2016, in which the investor’s Chief Executive Stefan Björkman said in a public release that, “Brexit did not rattle Etera’s investment portfolio or solvency.”

Other institutional investors such as Canadian and U.S. pensions have signaled their intentions to remain allocated to the United Kingdom. Even Norway is committed to remain investing in the U.K. Norway’s sovereign fund returned 1.3% for its second quarter 2016 period – equities contributed 0.7%. In fact, equities make up 59.6% of the wealth fund’s allocation at the end of June 2016. If equities were to continue to rally, the sovereign investor would greatly benefit, offsetting losses in past quarters.

Are We Out of the Woods?

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CIC Sells 10% Logicor Stake to Blackstone Fund

The China Investment Corporation (CIC) is selling a 10% stake of in European warehouse firm Logicor Ltd to a real estate fund managed by The Blackstone Group. Furthermore, CIC also hired Blackstone to oversee and manage Logicor’s warehouses and logistic properties portfolio.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Fintech Affirm Raises $200 Million in Series E Led By Singapore’s GIC

Affirm Inc., a financial technology firm which provides instant loans to consumers as an alternative to credit cards for their online shopping, has raised US$ 200 million in a Series E round lead by Singapore’s GIC Private Limited, with participation from Khosla Ventures, Lightspeed Venture Partners, Spark Capital, Caffeinated Capital, and Ribbit Capital. The new infusion of capital brings the San Francisco-based company’s total funding to US$ 450 million and a reported valuation of US$ 2 billion.

The company is founded by Max Levchin, a co-founder of PayPal (part of the PayPal mafia, dubbed by the tech press). Max Levchin is also an advisory board member of the Consumer Financial Protection Bureau (CFSB) in the United States.

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CHANGE: Saudi Arabia to Re-Open Movie Theaters, PIF Inks MoU with AMC

The Saudi Arabian government is ending its 35-year ban on cinemas. Next year, the government will allow cinemas to open. This watershed moment provides opportunities for entertainment companies to invest in Saudi Arabia and the surrounding region.

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