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China should cut dollars if U.S. too loose: sovereign fund

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According to Reuters, “China should sell dollars and diversify its foreign exchange reserves if the United States sticks to loose monetary policy, the head of the Chinese sovereign wealth fund said in an article published this week.  Lou Jiwei, chairman of the $300 billion China Investment Corp, also offered policy advice to the United States, saying the best course of action would be for it to tighten monetary conditions while ramping up stimulus spending.  He said the United States did not have much to gain from monetary easing, because little cash was entering the real economy and a large amount was leaving the country via dollar-funded carry trades.  Under such conditions, the dollar would steadily depreciate, and Asian economies and oil exporters might lose faith in it as a global reserve currency, he said.

“For China, the chief tools to reduce economic risks are to strengthen regulation of capital flows, control liquidity through cash management, monitor asset markets and divert foreign exchange reserves to non-dollar assets,” Lou said.

The article was published this week as part of a book for the Second Summer Palace Dialogue, a meeting of American and Chinese economists that took place in Beijing.

It appeared that Lou had written the article at least several months earlier, but this was the first time that it had been published.  There is evidence that China has, in fact, stepped up its pace of foreign exchange diversification this year, cutting back its vast holdings of U.S. Treasuries and buying record amounts of Japanese and South Korean debt.  But Lou said that it was not too late for the dollar. A move toward tighter monetary policy would reduce expectations of depreciation, restrain the dollar-funded carry trade and support global financial stability, he said.  For the U.S. economy, tighter monetary policy could also pay unexpected dividends, he said.

“If the dollar carry-trade lessens and capital from Asian countries and oil-exporting countries continues to flow to the United States, then liquidity in the United States might even increase,” he said.”

Read more: Reuters

Antares Bain Capital Complete Financing Solution Backs symplr Deal

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On December 10, 2018, Antares Bain Capital Complete Financing Solution provided a senior secured unitranche credit facility for Clearlake Capital Group, L.P. to acquire symplr, a healthcare governance, risk, and compliance software-as-a-service platform from Pamlico Capital and The CapStreet Group. Golub Capital provided financing for the transaction as well.

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PSP Investments Exits Antelliq

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On December 14th, Private equity firm BC Partners, Public Sector Pension Investment Board (PSP Investments), and other minority co-investors have signed a definitive agreement with Merck, known as MSD outside the United States and Canada, to sell Antelliq Corporation, a Vitré, France-based provider of digital animal identification, traceability, and monitoring solutions. Upon close, Antelliq will be a wholly owned and separately operated subsidiary within the Merck Animal Health Division. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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JPMorgan Edges Out Hamilton Lane on Florida SBA In-State Mandate

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The Florida State Board of Administration (SBA) manages a plethora of Florida state funds, including the state’s defined benefit plans. Florida’s SBA awarded a private equity portfolio mandate which targets high-technology businesses in Florida to J.P. Morgan Asset Management. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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