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How Falling Oil Prices Are Impacting Sovereign Wealth Funds

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offshore111To weather the boom and bust cycles of crude oil commodities, many oil-rich countries and states formed sovereign wealth funds to accumulate assets (see – sovereign wealth fund definition). At the beginning of 2008, sovereign wealth fund assets stood at US$ 3.43 trillion. As of March 2015, sovereign wealth funds have over US$ 7.1 trillion in assets under management. Of those assets, US$ 4.29 trillion come from oil & gas sovereign wealth funds. Sovereign wealth funds such as Norway’s Government Pension Fund Global (GPFG), Kuwait Investment Authority (KIA) and Qatar Investment Authority (QIA) were created to buffer their government’s fiscal budget from oil price volatility.

Sovereign wealth fund profiles

During the summer of 2014, oil prices hovered and peaked around US$ 115 per barrel. Months later, oil prices plummeted to the 60 dollar price range, roiling stock markets, energy exchange-traded funds (ETF), junior energy exploration companies and oil production projects. To make matters worse for oil producers who operate at the US$ 80 per barrel break-even price range, OPEC announced it will not restrain production to fight the decline in oil prices. Before the oil crash, a number of oil-based economies donned Panglossian spectacles when it came to their countries fiscal budget – spending lavishly on social programs and expensive infrastructure. Fallen oil prices have shifted the views of higher-risk countries exposed to oil wealth.

Non-US Sovereign Wealth Fund Ranking – Risk Levels of Depletion and Break Even Prices

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Former FSDEA Chairman Arrested in Angola

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Jose Filomeno de Sousa dos Santos, the son of Angola’s former president and former chairman of the country’s sovereign wealth fund, has been placed under arrest, according to the state prosecutor’s office. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Keppel Land China Acquires Stake in Nanjing Jinsheng Real Estate Development

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On September 20, 2018, Keppel Land China, a subsidiary of Singapore-based Keppel Corporation, purchased a 40% stake in Nanjing Jinsheng Real Estate Development Co, a subsidiary of Gemdale Corporation. Keppel Land China did the deal through an entity called Eternal. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Korea NPS Co-Invested in Delaware Basin Assets with Morgan Stanley

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The Delaware Basin is a geologic depositional and structural basin in West Texas and southern New Mexico. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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