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China, APEC, and Sovereign Wealth Funds

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Chinese President Hu Jintao pushed the theme of increased Asian infrastructure to stir up demand at the recent Asia Pacific Economic Cooperation (APEC) summit held this year in Vladivostok, Russia. The National Development and Reform Commission (NDRC), China’s economic planning entity approved 60 infrastructure projects costing around US$ 157 billion.

China is preparing to grow infrastructure development, push urbanization, and further develop social services in the country.

These measures are being produced to try to counteract slower projected GDP growth. This approval is a much smaller Chinese stimulus, then the stimulus package of 2008-09. The NDRC approved 25 rail projects in urban areas. Many of the large Chinese cities plan to have subway systems by the end of the decade.

At APEC, the major issues that were discussed include: trade and investment liberalization, regional economic integration, strengthening food security and establishing reliable supply chains.

The China Investment Corporation’s Jin Liqun told reporters on the sidelines of an international sovereign wealth fund forum in Mexico City, “the government is intentionally bringing down the growth rate, from 8% to 7.5% as a target, and I think we can achieve 7.5% for 2012.”

He further added, “the government is not taking this cavalierly, the government is doing a lot of things to help sustain the growth of the economy. In my view if the economy can grow at above 7%, it’s fine.”

Funds and Ownership, KKR Partners with Shinhan Financial

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South Korean financial giant Shinhan Financial Group Co., Ltd. reached a preliminary agreement with KKR & Co. to form a series of global buyout funds that could raise up to 5 trillion KRW. KKR and Shinhan signed a Memorandum of Understanding (MoU) in Seoul in early October. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Norwegian Government Recommends SWF Remains at Central Bank

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There was speculation that Norway Government Pension Fund Global (GPFG) could be managed outside of Norges Bank. The Norwegian government shot down this idea and recommended Norway’s GPFG remain in Norges Bank. This recommendation came in the form of a white paper submitted to the Norwegian Parliament, Stortinget.

Norway’s Minister of Finance Siv Jensen, commented in a press release, “The Government proposes a new and modernised governance structure for Norges Bank. Moving forward, this new structure lays the foundations for the sound management of the central bank and of the GPFG.”

Some Central Bank Recommendations

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Invesco Buys OppenheimerFunds for $5.7 Billion

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Invesco Ltd. signed a deal to acquire OppenheimerFunds, Inc. from Massachusetts Mutual Life Insurance Company (MassMutual). In turn, MassMutual and the OppenheimerFunds employee shareholders will receive a combination of common and preferred equity consideration, and MassMutual will become a significant shareholder in Invesco, with an approximate 15.5% stake. This strategic transaction will bring Invesco’s total assets under management (AUM) to more than US$ 1.2 trillion. The transaction is expected to close in the second quarter of 2019, pending necessary regulatory and other third-party approvals. The transaction gives Invesco access to more third-party distribution platforms.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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