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Are Institutional Investors Out of the Woods?

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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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Japanese Government Capital Provides Initial Life for Texas Bullet Train

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Dallas-based Texas Central Partners, LLC is the developer of a proposed high-speed rail system, dubbed the Texas Bullet Train, between Dallas and Houston. Project costs are estimated between US$ 12 billion to US$ 15 billion. The developer secured US$ 300 million in project loans from Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN) and the Japan Bank for International Cooperation (JBIC). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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DOJ Investing Tesla Over Musk Comments

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The U.S. Department of Justice (DOJ) is conducting a fraud investigation over Tesla as its CEO Elon Musk made public statements on twitter. This is a criminal probe. In addition, earlier, SWFI reported the U.S. Securities and Exchange Commission (SEC) is conducting a civil inquiry into Elon Musk regarding his statements.

This all surrounds Musk tweeting in August that he was thinking of taking Tesla private and had “funding secured” for the transaction. Both government authorities are seeing if Musk misled investors and violated federal securities laws with his public statements.

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Marsh & McLennan Companies to Acquire JLT Group

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Marsh & McLennan Companies, Inc. (MMC), a global professional services firm offering clients advice and solutions in risk, strategy and people, announced that it has reached an agreement to acquire Jardine Lloyd Thompson Group plc (JLT), a provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services. The transaction has been approved by the Board of Directors of each of MMC and JLT. JLT’s largest shareholder, Jardine Matheson Holdings, and JLT directors who collectively represent 40.5% of the issued and outstanding JLT shares in support of the transaction.

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