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Facing $5 Billion in Paper Loss, GIC Converts UBS Notes

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Singapore’s sovereign wealth fund converted its UBS notes into ordinary shares, getting hit with a paper loss of approximately US$ 5 billion. The Government of Singapore Investment Corporation allocated 11 billion CHF (US$ 10.22 billion) in mandatory convertible notes in UBS AG. The investment was used to support the Swiss financial giant during the global financial crisis.

The GIC is facing significant reputational risk among its peers and the Singapore public.

The GIC believed in the franchise value of UBS. GIC officials are hoping its investments in these global financial institutions play out. The GIC is facing significant reputational risk among its peers and the Singapore public.

A filing through the SEC in April displayed the original conversion price would be 47.7 CHF, two-thirds more than UBS’s last share price of 15.86 CHF. Singapore’s GIC earned nearly 2 billion CHF from a 9% coupon over the last 2 years. This partially compensated the sovereign wealth fund for the deep dive of the share price of UBS.

GIC had earned about 2 billion francs from a 9 percent coupon over the last two years, which partially compensated for the sharp erosion in UBS’ share price.

Saudi Aramco and PIF See Opportunities in Russia

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Saudi Arabia’s Public Investment Fund (PIF) is currently exploring opportunities within Russia. PIF is working with the Russian Direct Investment Fund (RDIF) on a number of fronts. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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HNA Group Aims to Shrink and Sell

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Chinese conglomerate HNA Group is on a selling spree due to an order from the government in Beijing to scale back on debt. HNA Group joins Anbang Insurance Group and Dalian Wanda Group in deleveraging from global assets, particularly in hotels and real estate. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Central Bank of Hungary Buys Mounds of Gold

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In October, the Central Bank of Hungary (MNB) boosted its gold reserves by 10 times, from 3.1 tons to 31.5 tons. This was revealed on October 16, 2018. The gold acquired by the central bank in October has a holding value of US$ 1.24 billion.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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