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Colombia May Join Colleagues in Creating a Sovereign Wealth Fund

Many South American countries are facing the stress of unwanted appreciation in their currencies. Colombia is joining the chorus with Brazil. The Colombian President Juan Manuel Santos is against added interest rate increases by the Banco de la República de Colombia (Central Bank). The Colombian peso is gaining tremendous ground on the US dollar. The pesos appreciation could spur a move to have government regulators limit the amount of foreign investment. Colombia wants to balance demand between its export market and demand of direct foreign investments.

Sovereign wealth funds are attracted to South America with its burgeoning middle class and lush natural resources. Such a reversal in foreign direct investment policy could hinder future investment opportunities and be harmful to local workers.

One way to help lower demand for the Columbian peso would be to create a sovereign fund to invest abroad. Colombia is another Latin American country fortunate to have significant amounts of oil and other precious metal deposits. Mr. Santos is fully aware of the issue of Dutch Disease and how it can affect a fragile country that is trying to diversify into a number of industries. To prevent rapid currency appreciation and the harming of other industries, Mr. Santos is seeking legislation to create a sovereign fund. The sovereign fund would save excess oil and mining revenue.

Institutional Investors Remain Skeptical as Bitcoin Continues to Rise

Bitcoin has continued to rally over the past month – hitting a record US$ 8,224 in the early hours of November 20 – and institutional investors are beginning to take notice of the cryptocurrency’s increasing popularity. With a market value of more than US$ 130 billion, the digital currency has seen unprecedented growth of over 700% over the past year. But Bitcoin’s rise has also been marked by a number of volatile slumps, leaving institutional investors divided over its durability as a long-term store of value and wondering whether to get in on the action. Despite these headwinds, more than 100 hedge funds have been formed to trade in digital currencies.

Split Consensus on Wall Street

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3 Reasons Why Other Sovereign Funds Will Not Dump Oil Stocks

Norges Bank informed the country’s ministry of finance to recommend the wealth fund to remove oil and gas listed equities from the fund’s benchmark index. The central bank came to the conclusion that Norway’s Government Pension Fund Global (GPFG) would be less vulnerable to a permanent drop in oil prices if the wealth fund was not invested in oil and gas listed equities. For some academics there are arguments that wealth funds should diversify away from their sources of wealth. Contradictory studies have demonstrated that wealth funds should support industries that enhance the country’s sources of wealth. For example, earlier on, Norway’s fossil fuel wealth was buoyed by increased capital investment to the oil sector to increase output, a pre-cursor to the wealth fund’s explosive growth.

1. Stock Performance
For some sovereign investors, investments in master limited partnership in oil and gas have been strong driver of returns, or even in smaller fossil fuel listed companies. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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GIC Financially Backs Innovation Precinct Project in Melbourne

Singapore’s GIC Private Limited acquired a majority interest in a joint project located in Melbourne, Australia. The joint project is between Sydney-based Lendlease, Australia-based Urbanest and GIC. In 2014, the project was labeled Carlton Connect Initiative with the goal of being an innovation hub.

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