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Russia’s New SWF: National Welfare Fund

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Alexei Kudrin

The Moscow Times reporting that “Russia has made much of its natural wealth, boasting some $157 billion accumulated in the stabilization fund from excess oil revenues. As of Friday, the stabilization fund will be split into the Reserve Fund and the National Welfare Fund.

Russian finance minister Alexei Kudrin reiterated the government’s commitment to investing some of that wealth into financial markets.

The official in Kudrin’s ministry who was until recently in charge of the stabilization fund, Deputy Finance Minister Sergei Storchak, remains in pre-trial detention on fraud and embezzlement charges. Investors have expressed concern over Storchak’s continued detention, seeing in the case a possible threat to Kudrin’s position and to his policy of using the Stabilization Fund to hedge against drastic falls in global demand for oil and gas.”

The National Welfare Fund will initially be invested very conservatively, with the following guidelines:

  • (i) All must be in foreign debt, denominated in USD, EUR or GBP, rated at least AA-, from Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Luxembourg, the Netherlands, Spain and the US.
  • (ii) At least 50% in foreign government debt, with the rest in foreign private/corporate debt.
  • (iii) Up to 30% in foreign agency debt and central bank debt.
  • (iv) Up to 15% in debt of international financial organizations (ADB, EIB, etc.).
  • (v) Up to 30% in foreign bank deposits.

Japan’s GPIF Awards Nissay Asset Management with ESG Disclosure Mandate

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Increasingly asset owners across the Asia-Pacific region are studying the impacts of environmental, social, and governance factors on listed companies. As more Japanese pensions augment asset allocation to listed equities, the importance of corporate non-financial disclosures and practices becomes clear. These disclosures can have a material impression on company stock prices. In addition, Japanʼs Stewardship Code and Corporate Governance Code in 2014 and 2015 were launched, respectively. These codes helped the (environmental, social, and governance) ESG concept gain momentum in Japan.

Japan’s Government Pension Investment Fund (GPIF), the largest public pension fund in the world, awarded a research mandate to Nissay Asset Management Corporation. The mandate entails studying ESG disclosures. The study will conduct a comparable analysis on ESG standards and practices, while taking into account input from both investors and companies. With around US$ 110.5 billion in assets under management, Nissay Asset Management is owned by Japanese life insurance giant Nippon Life Insurance Company.

As GPIF boosted its allocation to domestic equities, the asset owner took a deeper look into the impact of ESG on equity investing. GPIF is keen on improving efficiencies in Japan’s capital markets. GPIF is a universal owner of stocks, similar in some aspects to what Norway’s Government Pension Fund Global (GPFG) does.

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Norges Bank Real Estate Management Buys Central Paris Property

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Norges Bank Real Estate Management, the real estate unit of Norges Bank Investment Management (oversees Norway Global Pension Fund Global), has signed an agreement to acquire a 100 percent interest in an office property located on 54-56 rue la Boétie in central Paris.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Schlumberger Gets Closer to Eurasia Drilling Company

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Russia’s sovereign wealth fund, the Russian Direct Investment Fund, and American oilfield services giant Schlumberger (SLB) have planned a deal to invest in Russia’s Eurasia Drilling Company Limited. RDIF CEO Kirill Dmitriev made the announcement. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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