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Sovereign Funds Went Big in the Final Quarter of 2016

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Despite a succession of political shockwaves, sovereign wealth funds went back to plowing money into direct investments in the fourth quarter of 2016, investing US$ 60.31 billion versus US$ 30.43 billion in 4Q 2015, according to data from the Sovereign Wealth Fund Institute (SWFI). The SWFI transaction database tracks direct transactions made by sovereign funds, pensions and other public funds. Sovereign investors rallied in listed equities in the final quarter of 2016, with the United States far ahead.

Direct Transactions by Sovereign Wealth Funds – Billions USD

Source: Sovereign Wealth Fund Transaction Database, Extracted April 17, 2017

Source: Sovereign Wealth Fund Transaction Database, Extracted April 17, 2017

Sovereign investors rallied in listed equities in the final quarter of 2016, with the United States far ahead.

Energy and Real Estate

The energy sector contributed a whopping US$ 12.3 billion in the fourth quarter of 2016 by wealth fund direct investments. Next, the real estate sector represented US$ 11.4 billion in direct investments by sovereign funds in the fourth quarter of 2016. Some major real estate deals boosted the total, such as the China Investment Corporation (CIC) acquiring Canada Pension Plan Investment Board’s (CPPIB) 45% ownership stake in 1221 Avenue of the Americas, a Manhattan office property. The sales price for the stake was US$ 1.03 billion, with net proceeds to CPPIB of approximately US$ 950 million before closing adjustments.

Betting on Banks

Arguably one of the central reasons why global institutional investors bet large on banks is the probable rise of U.S. interest rates, coupled with possible reforms on the U.S. Dodd–Frank Wall Street Reform and Consumer Protection Act. The financial sector was a significant contributor to the total amount of direct wealth fund transactions in the ending quarter. Direct investments in the financial sector by sovereign funds surged to US$ 6.56 billion in the fourth quarter of 2016 compared to US$ 3.49 billion in the third quarter of 2016. Some notable transactions include large purchases of positions of listed equities in Comerica and Aviva.

China Helps Pakistan’s Foreign Reserves

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Despite Pakistan witnessing an increase in exports, the rapid increase in crude prices and lackluster financial inflows, have affected the country’s balance of payments position. Trying to avoid a full-scale currency crisis, Pakistan is also dealing with a fiscal budget deficit and a current account deficit. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Russia-Japan Investment Fund to Back Wood Pellet Production in Russia

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The Russian Far East has a lot of timber, and for that wood pellets is a source of biofuel. A while back, the Russian Direct Investment Fund (RDIF) formed the Russia-Japan Investment Fund (RJIF) with the Japan Bank for International Cooperation (JBIC). RDIF and JBICIG Partners as part of RJIF, together with RFP Group and Japan’s Prospect Co., Ltd. have agreed to collaborate and consider potential investments in Russia’s biofuel industry. JBICIG Partners is a subsidiary of the Japan Bank for International Cooperation.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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RDIF Lures Asian Investors Toward Russian Surgical Robot Project

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The Russian Direct Investment Fund (RDIF) is partnering with a number of unnamed Asian co-investors to allocate capital toward a project to create and manufacture Russian surgical robots. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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