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Most Western Public Institutional Investors Still Shun Listed Cannabis Companies

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Western public funds are still cautious in moving capital into cannabis companies. For example, Sweden’s national pension ethics committee, the AP Funds Ethics Council, has dissuaded national buffer funds (AP1, AP2, AP3, AP4) from investing in cannabis companies. The four funds have a combined €137 billion under management, and will accept the decision. AP4, speaking for all of the funds, clarified: “The companies Aurora Cannabis, Canopy Growth, and Aphria, have all confirmed that they sell cannabis for private use and the Ethics Council, therefore, considers that the companies can be linked to violations of the UN convention on narcotic drugs.” Cannabis is listed as a narcotic drug in Sweden, and this designation comes with high-level, mandatory regulation. Medical and scientific experiments are permitted.

Cannabis equities have been stock market darlings over the past year, with Tilray (TLRY), for example, booming to over US$ 200 a share before settling down in the US$ 80 range. A number of hedge funds are top holders in Tilray including Farallon Capital Management LLC, a hedge fund founded by major Democratic political donor and activist Tom Steyer, and Anson Funds Management LP, which was founded by Moez Kassam, a Canadian-born money manager under the age of 40. Interestingly, as of September 30, 2018, the California Public Employees Retirement System (CalPERS) directly held 1,617 shares of Tilray stock, worth around US$ 134,000 – mostly likely in an indexed strategy.

Other product makers have seen spikes on news that they may lace their products with cannabis for public consumption. The trend toward legalization in the United States and Canada has many smoking openly in public for the first time. Canada Prime Minister Justin Trudeau announced his “new legalized framework” late in 2018. U.S. federal law, however, has not followed suit.

China’s Central Bank Creates Macro-Prudential Management Bureau

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The People’s Bank of China (PBOC) created a new department to oversee and attempt to eliminate financial risks to the system. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Like its U.S. Peers, Legg Mason Seeks to Trim Costs

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Legg Mason Inc., a Baltimore-based asset manager, has announced a reduction in workforce as is prepares to streamline operations and save money. Legg Mason’s leadership commented that assets under management fell 5 % year-on-year. Legg Mason currently manages US$ 727.2 billion (as of December 31, 2018), which is down from the previous US$ 767.2 billion. CEO Joseph A. Sullivan noted that a global operating platform will centralize fund administration, IT, and other departments that work with affiliates. Sullivan did not discuss the number of layoffs expected, or specify which areas would be impacted. Legg Mason disclosed they planned to close a quarter of its exchange-traded funds in March 2019. These three ETFs include a U.S. strategy, emerging markets, and a developed markets strategy outside the U.S. However, these funds run around US$ 28 million in assets under management.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Monetary Authority of Singapore Establishes Corporate Governance Advisory Committee

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On February 12, 2019, the Monetary Authority of Singapore (MAS) revealed the creation of a Corporate Governance Advisory Committee (CGAC). CGAC was formed to advocate for good corporate governance practices among listed companies in Singapore. Bobby Chin, Director of Singapore Telecommunications Limited, will be the Chair of CGAC. According to a MAS press release, “CGAC will identify current and potential risks to the quality of corporate governance in Singapore.”

MAS formed the Corporate Governance Council (Council) in February 2017. The Council was dissolved after it pushed out a publication of its final recommendations on August 6, 2018.

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