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Effects of U.S. Currency Depreciation on Sovereign Wealth Funds

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As the U.S. dollar declines relative to other currencies, many sovereign wealth funds are finding U.S. companies rather inexpensive. Already many sovereign funds, such as the China Investment Corporation (CIC), have taken significant stakes in U.S. brand name financial institutions like Morgan Stanley, while other sovereign funds have invested in technology firms like Advanced Micro Devices Inc (Mubadala Development Company). These deals are average for the sovereign investor and many proclaim they are in these investments for the long-run.

Since many central banks with large current account surpluses are now beginning to emulate private portfolio managers; they are seeking to improve their asset allocation. Sovereign wealth funds are diversifying their portfolios into non-currencies to achieve higher returns rather than holding a depreciating U.S. currency. According to the People’s Bank of China, they had around US$1.7 trillion in foreign reserves in December 2007. This gives the CIC, a SWF to Foreign Exchange ratio of 0.12x (this leaves out SAFE and the Hong Kong Monetary Authority Investment Portfolio) which is low compared to the Abu Dhabi Investment Council’s ratio of 29.54. This ratio entails how large sovereign wealth funds are in size compared to foreign currency reserves.

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ADIA Seeks to Sell KIC Headquarters

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The Abu Dhabi Investment Authority (ADIA) is seeking to sell the building that houses the headquarters of the Korea Investment Corporation (KIC). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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BMO and OTPP Test Blockchain Canadian Dollar Debt Deal

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The Bank of Montreal (BMO) and the Ontario Teachers’ Pension Plan (OTPP) participated in a landmark blockchain Canadian-dollar debt transaction. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Just Group Acquires Corinthian Pension Consulting

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Just Group plc acquired a 75% ownership stake in the holding company of Corinthian Pension Consulting Limited (Corinthian Pension Consulting). Operating in the institutional world for over 12 years, Corinthian Pension Consulting provides advisory services to defined-benefit pension scheme trustees and scheme sponsors undertaking bulk scheme exercises. The remaining 25% will be retained by current shareholders of Corinthian Pension Consulting. Robert MacGregor will continue to lead Corinthian Pension Consulting, as its Chief Executive Officer. Furthermore, Corinthian Benefits Consulting Limited and Corinthian Affinity Solutions Limited will continue to operate as before, becoming part of a newly formed holding company, Corinthian Group Holdings Limited.

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