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Bloomberg Story on Chinese Spy Chips in Amazon and Apple Opens a Dam

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Since the 2000s, the majority of hardware and electronic components used by U.S. technology giants were manufactured in Asia, specifically China. Having a purely U.S. market of electronic manufacturers would reduce supply and increase costs, while outsourcing hardware manufacturing to China would increase supply, lower cost, but increase national security and cybersecurity risks for the U.S. The economics argument won over U.S. tech executives in the late 1990s. At the same time, on the financial front, Amazon.com, Apple and other technology companies continue to increase market capitalization, upending traditional Dow constituents like General Electric (GE). Some experts believe institutional investors focused on revenue and market share are failing to recognize geopolitical and regulatory risk from technology giants.

On October 4, 2018, reporting by Bloomberg BusinessWeek (writers Jordan Robertson and Michael Riley), the story being title, “The Big Hack: How China Used a Tiny Chip to Infiltrate U.S. Companies“, revealed that data center equipment used by Apple and Amazon Web Services, a service of Amazon.com, could have been subject to surveillance (spying) from the Chinese government. How many large U.S. corporations have migrated to the cloud (outsourced server solutions)? Is their data safe from spying? This story could have profound implications on hundreds of technology companies.

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Heliconia Capital Management Plans to Invest in Asian Healthcare Specialists

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Singapore-based Asian Healthcare Specialists Limited signed a deal with Vanda 1 Investments, an entity controlled by Heliconia Capital Management. Helconia Capital Managed is owned by Temasek Holdings. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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BlackRock Experiences Outflows Among Institutional Investors

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Is BlackRock at peak earnings? BlackRock disclosed its third quarter 2018 results showing a growth of assets under management at US$ 6.4441 trillion at the end of September 2018 versus US$ 5.976892 trillion at September 2017. However, a large portion of the AUM growth has been in the ETF business, iShares, which tends to be very low in fees. The iShares business saw an inflow of US$ 33.7 billion for the quarter.

For the third quarter, BlackRock experienced US$ 24.8 billion in institutional investor outflows, with US$ 23.6 billion being on the index side, while US$ 1.2 billion being on the active side. Institutional investors such as pensions, insurers, and hedge funds withdrew from passive equity strategies. BlackRock saw US$ 4.745 billion in outflows in active equity on the institutional side, but seeing inflows of US$ 2.471 billion in multi-asset institutional and inflows of US$ 1.468 billion in alternatives institutional.

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GIC Buys Large Stake in Nordic Aviation Capital

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Singapore’s GIC Private Limited, a yield-hungry sovereign investor, invested in Denmark-based Nordic Aviation Capital A/S, becoming a significant minority shareholder. Other shareholders in Nordic Aviation Capital include EQT VI Limited fund, KIRKBI Invest (wealth origins tied to Legos), and Martin Møller, the founder of Nordic Aviation Capital. EQT VI will remain the largest shareholder of Nordic Aviation Capital. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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