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Sovereign Funds Track Developments in Chinese Stock Market

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Sovereign wealth funds are active investors in mainland China’s stock market. Volatility and government interference are key concerns for these large institutional pools of long-term capital. Norway Government Pension Fund Global is active in China’s stock market. Norway’s GPFG participated in the initial public offerings of electric car startup NIO Inc., Meituan Dianping, and China Tower Corporation Ltd. Listed China stocks make up only 3.7% of Norway GPFG’s total portfolio. Other sovereign funds like GIC Private Limited, Temasek Holdings and some Gulf funds have taken larger stakes in Chinese companies before going public.

Chinese Investors Pump Money into Chinese ETFs

Chinese investors, breaking a previous record, put ¥42.5 billion (US$ 6.2 billion) to work in a combined 145 exchange-traded funds (ETFs) that track Chinese stocks. Chinese ETFs saw 22.8 billion shares purchased in October. Two of the funds alone, the China Asset Management Shanghai Stock Exchange 50, and Huatai Securities Bairui CSI 300, pulled in ¥18 billion. State-owned China Securities Finance, and Central Huijin Investment, a division of China’s sovereign wealth fund, funneled cash into the Shanghai Stock Exchange 50, China Security Index 300, China Security Index 100, and a number of additional ETFs. These and other organizations are pushing money into the market, in part, to allay fears about market weakness. It is hoped that the moves will boost public confidence in the economy.

Furthermore, index provider MSCI plans to announce its decision on or before February 28, 2019, on whether to alter weighting of China’s A-shares in its index.

Chinese Government Continues to Provide Support Levels to Local Markets

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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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