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Larry Summers Withdraws, Probable Boost for Equities

Larry Summers

Larry Summers

In a letter addressed to U.S. President Barack Obama on September 15th, Lawrence “Larry” Summers withdrew his name from consideration to succeed Federal Reserve Chairman Ben Bernanke, whose term is to end on January 31st. Mr Summers served in both the Clinton and Obama administrations.

In the letter, Mr Summers cites as his reason for withdrawing an “acrimonious” confirmation process that “would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.”

Money managers and economists perceive that Yellen would be more dovish than Summers.

The withdrawal comes after heated and vocal protests by senate democrats against his possible nomination. Separately, a group of 350 economists were against a nomination for Mr Summers, sending a letter to President Obama that urged him to consider Janet Yellen instead.

Economists and media outlets were more concerned with his perceived role in the most recent financial crises. They were especially critical of his high-praise of the repeal of certain provisions of the Glass-Steagall Act in 1999 and for his pre-crisis success in helping to prevent increased regulation of the derivatives markets.

Janet Yellen, a likely nominee, is professor emeritus at the University of California, Berkeley. She served as the president and CEO of the Federal Reserve Bank of San Francisco from June 14, 2004 until 2010. If nominated and confirmed, she is expected to continue policies similar to those of Ben Bernanke. This may be good news for Wall Street. A CNBC September Fed Survey taken last week revealed Wall Street professionals in a 5-to-1 margin preferred Janet Yellen over Larry Summers for the Fed post. Money managers and economists perceive that Yellen would be more dovish than Summers. A Yellen nomination would be a continuation of easy money policy, thus keeping equity markets afloat.

Asian Sovereign Funds Not Slowing Down on Tech Investing

According to data from SWFI’s Sovereign Wealth Fund Transaction Database, Asian sovereign funds invested US$ 6.05 billion directly into companies and assets in the information technology sector from Jan 2017 to November 22, 2017. In a comparable time frame from Jan 2016 to November 22, 2016, this same group of Asian sovereign funds directly invested US$ 5.02 billion in the sector. These are direct investments, not fund commitments or manager allocations.

Asian sovereign funds such as GIC Private Limited, Temasek Holdings and the Korea Investment Corporation (KIC) have demonstrated bullish signals to the technology community over other sectors. GIC and Temasek have also been major investors in the private side of deals, funding a wide range of tech startups, while providing financial firepower in buyout transactions.

Some notable direct tech investments in 2017 by sovereign funds include Meituan-Dianping, SoundCloud, Nets A/S, Visma AS, Turn, Inc. and Vantiv.

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Future Fund Makes a Guardian Out of Former J.P. Morgan ANZ Chair

The Australian government has appointed Robert Priestley – current non-executive chair of J.P Morgan for Australia and New Zealand (ANZ) and a non-executive director of ASX – to serve on the Future Fund Board of Guardians for a five-year term from November 7, 2017. Priestley replaces former Morgan Stanley Australia chief executive Steven J. Harker.

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Associated British Ports Reboots Property Development Arm to Capitalize on Land Bank

Associated British Ports (ABP) – operator of 21 major ports throughout the United Kingdom – has announced a reboot of its ABP Property division, complete with a new team of specialists in commercial development and logistics led by Huw Turner, in order to identify and develop strategically significant locations in its 2,372 acre land bank.

ABP is owned in large part by a consortium of pensions and sovereign funds, including the Canada Pension Plan Investment Board (CPPIB) at 33.88% ownership, OMERS at 30%, Singapore’s GIC Ventures Pte Ltd at 20.00% ownership, and the Kuwait Investment Authority at 10.00% ownership. Large institutional investors such as sovereign funds, pensions, and endowments have slowly increased allocation towards infrastructure over the past six years as an alternative to equities and bonds, according to asset allocation data from SWFI.


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