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Korea National Pension Fund Targets Overseas Stocks

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korea_sThe largest public institutional investor in Korea is the National Pension Service. In recent times, the massive pension system sliced its five-year investment return target from 6.6% (2014-2018) down to 6.1% (2013-2017). Korea’s gross domestic product and inflation data influenced the return adjustment decision. As of March 2013, Korea’s National Pension Service (KNPS) assets total 406 trillion won (US$ 359 billion).

The KNPS has a 20% asset allocation to domestic stocks and owns nearly 6% of Korea’s public stock market.

Public pressure and an aging demographic, similar to Japan, have forced the KNPS to look abroad for investing. In 2014, KNPS plans to grow the allocation of overseas public equity to 10.5%, from 9.3% in 2013.

See National Pension Service Korea Profile

Progressively, public investors are allocating a greater proportion of assets overseas, lowering home allocation especially in fixed income. Gargantuan domestic investors have excessive exposure to home markets. Japan’s Government Pension Investment Fund signaled a major move to look beyond the shores of Japan.

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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