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Norway’s GPFG Returns 4.7 Percent for 3rd Qtr 2012

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According to the press release, “the Government Pension Fund Global returned 4.7 percent, or 167 billion kroner, in the third quarter of 2012.

“The result was largely driven by a rally in global stock markets,” says Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM), which manages the fund. “Stocks gained the most in Europe, where the fund has about half of its shareholdings.”

Equity investments returned 6.5 percent and fixed-income investments returned 2.2 percent. The return on these investments was 0.03 percentage point lower than the return on the fund’s benchmark indices. Investments in real estate returned 2.7 percent.

The fund in the quarter reduced its holdings of French and Spanish government debt. It boosted its investments in US and Japanese government bonds and increased its holdings of government bonds issued in the currencies of emerging economies such as South Korea, Mexico and Russia. The changes reflect a strategy to gradually reduce the fund’s share of European bonds while increasing bond investments in other regions.”

Read more: Norges Bank Investment Management Press Release

US Treasury Sec Mnuchin May Have More Sanctions for Turkey

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U.S. Treasury Secretary Mnuchin revealed the United States is preparing more Turkey sanctions. This stems over the issues with an American pastor in Turkey. Turkey’s lira, has fallen to record lows recently.

The week before, U.S. President Trump announced the doubling of tariffs on Turkish steel and aluminium to 50 and 20 percent, respectively. Turkish president Recep Tayyip Erdoğan has called for a boycott of electronics products of the United States, which includes iPhones (a smartphone product of Apple).

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Scott Keller Returns to T. Rowe Price to Head up EMEA

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Scott Keller returns to T. Rowe Price as head of global investment management services for Europe, the Middle East and Africa from January 1, 2019. Keller is currently at UBS Global Asset Management, working in the Asia Pacific region, heading efforts in the bank’s institutional and intermediary distribution. Keller joined UBS in 2014. Before UBS, Keller was at T. Rowe Price.

Scott Keller is replacing Peter Preisler at T. Rowe Price. Preisler exited T. Rowe Price in August 2017.

At UBS, Nick Trueman will replace Scott Keller.

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Rising Interest Rates Impact Sovereign Wealth Strategies

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Sovereign wealth funds are paying closer attention to the U.S. Federal Reserve as it enters fresh territory under Jay Powell. Powell’s decisions are impacting foreign exchange holdings globally, as central bankers adjust to a newer environment of policy normalization. The United States is not the only country raising interest rates. The Philippines, Argentina, Indonesia, India, Czech Republic, Ukraine and Pakistan are just some emerging market countries that have raise interest rates.

Global institutional investors like BlackRock are concerned that the U.S. dollar could grind higher. In times of increased geopolitical or financial tensions, the greenback is seen as a safe haven by many central banks, sovereign funds and foreign public funds. July marks the 110th month of expansion, a streak that is one year away from becoming the longest in U.S. history. Stronger economic data – with U.S. gross domestic product hitting 4.1% for the second quarter of 2018, rising interest rates, and bids to lower U.S. trade deficits, are making sovereign funds rethink asset allocation or at least shift more assets out of markets like Turkey, South Africa and Brazil. The Turkish lira fell further in August, prompting the country’s central bank to take drastic action. The fallen lira sent jitters across emerging markets and to banks in Southern Europe who have exposure to Turkey. What are sovereign wealth funds doing now?

On the fixed income front, sovereign funds are paying much closer attention to their government bond holdings, keeping a close eye on countries that rely heavily on external funding. Shorter duration bonds and inflation-linked debt can act as a safeguard against rising rates and inflation. Sovereign funds, like Singapore’s GIC Private Limited, are recognizing that global equity returns are less synchronized, thus there is a move to identify select countries and regions being conducted for strategic asset allocation for 2019 and beyond. A stronger greenback, positive U.S. corporate earnings, and rising trade tensions between the U.S. and China are becoming a boon for active equity managers and smart beta funds, as public funds are requesting enhanced levels of skills in navigating stock selection. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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