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Possible Future for a Peruvian 10 Billion SWF

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Luis Miguel Castilla

Luis Miguel Castilla

The Latin American country of Peru is the globe’s second largest silver, copper, and zinc producer. Regards to gold producing Peru ranks number six. 60% of Peru’s exports come from mining activities. 20% of Peru’s fiscal revenues are derived from mineral reserves. It is fair to say commodity prices have a significant impact on Peru’s economy and national budget.

Peru’s southern neighbor Chile has two sovereign wealth funds, one is a stabilization fund. Currently, Peru only has a fiscal stabilization fund.

Government officials are debating the requirements for establishing a sovereign wealth fund in Peru. The proposed fund could be US$ 10 billion in size. Peru’s Minister of Economy and Finance Luis Miguel Castilla wants to see stabilization in the global commodity markets before they can finalize plans. Like other commodity-based sovereign funds, proceeds from mineral exports would be deposited into the sovereign wealth fund. The sovereign fund would invest the money overseas. Peru’s international reserves have doubled since the onslaught of the global financial crisis to around US$ 60 billion.

Since 2002, Peru has been able to pay down public debt. Peru’s Fiscal Responsibility and Transparency Law (FRTL) also called Ley de Responsabilidad y Transparencia Fiscal has been effective in helping the country reduce its debt. Public sector gross debt was reduced from 44% of GDP in 2004 to 24% of GDP in 2010.

Peru’s Fiscal Stabilization Fund
Peru has a fiscal stabilization fund (FEF). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Anbang Insurance Set to Sell its US Luxury Portfolio

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Distressed Beijing-based holding company Anbang Insurance Group is set to sell its U.S. luxury hotel properties, which were purchased for US$ 5.5 billion from the Blackstone Group in 2016. This is a move to raise quick cash, following the firm’s seizure at the hands of the Chinese government six months ago. Bids had already been ongoing for selected properties, including the famed Essex House Hotel, overlooking Manhattan’s Central Park. The portfolio of hotels is strategically placed in geographically diverse regions, including Miami and Chicago. Anbang is looking to cash in on the properties quickly, as its properties in China are already being liquidated. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Norway GPFG Returns 1.8% for Second Quarter of 2018

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Norway’s Government Pension Fund Global (GPFG) returned 1.8% for the second quarter of 2018. Listed equity investments generated a 2.7% return for the period, while fixed income returned 0%. Unlisted real estate investments posted a 1.9% return for the second quarter. In addition, the Norwegian krone depreciated against the U.S. dollar during the quarter. Furthermore, 2 billion NOK was withdrawn from the fund.

“North American and European stocks had a positive development in the quarter despite the prospect of increased trade barriers. This made a positive contribution to the fund’s return,” says Trond Grande, Deputy CEO of Norges Bank Investment Management, according to the press release.

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Rumors Swirl Around PIF Looking at Tesla Rivals

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Saudi Arabia’s Public Investment Fund (PIF) could be doubling down on electric automobile manufacturers. It was revealed that PIF has a sizeable stake in Tesla Inc. Elon Musk’s recent tweets have stirred up financial media and has even prompted an SEC probe.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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