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Survey Reveals Global Asset Owners See Trade Wars as Biggest Tail Risk



According to the quarterly SWFI Global Asset Owner Survey conducted in February 2018, large sovereign funds and pensions take the observation that trade wars and increased protectionism is currently the biggest tail risk. This is a shift from the stock market bubble as the biggest tail risk, which was revealed in December 2017. U.S. President Donald Trump announced tariffs on steel and aluminum as part of his “America First” strategy in which, he aims to get better trade agreements between countries to improve trade deficits between major trading partners. Critics contend this could create a retaliatory trade war, including Trump’s own National Economic Council Director Gary Cohn, who resigned on March 6, 2018. Proponents of the tariffs argue that the U.S. entered into trade deals far less favorable to U.S. companies in the past to help out other countries grow and become more stable.

According to the Office of U.S. Trade Representative, “U.S. goods and services trade with the EU totaled nearly $1.1 trillion in 2016. Exports totaled $501 billion; Imports totaled $592 billion. The U.S. goods and services trade deficit with the EU was $92 billion in 2016.

U.S. goods and services trade with China totaled an estimated $648.5 billion in 2016. Exports were $169.8 billion; imports were $478.8 billion. The U.S. goods and services trade deficit with China was $385 billion in 2016.”

The quarterly survey targets sovereign funds, pensions, endowments, superannuation funds, foundations, government funds and other asset owners. Totaled estimated survey sample size was over US$ 1.2 trillion of assets under management.

Only available for participants and subscribers.

Here are some key findings:

    The majority of respondents see long equities as the most crowded trade – specifically in Long Russell or S&P Index. Long U.S. technology equities were a close second.

    Now that U.S. tax reform is baked in, the majority of respondents view Treasury bonds yields as the biggest driver of equity prices in the next 6 months.

    Holding Steady – 45.5% of respondents plan to increase allocation to Europe ex-U.K. – a percentage and trend that has held steady in the last two quarterly surveys.

    25% of respondents plan to underweight cash, meaning investors are keen to deploy capital

According to Michael Maduell, president of SWFI, “It is too early to properly wargame the effects of President Trump’s action on tariff policy, but it has created a level of anxiety among the global institutional investor class.”

More About the Global Asset Owner Survey

This is SWFI’s second quarterly survey for asset owners. To participate in the next quarterly survey, CONTACT

SWFI intentionally excludes 3rd party asset and fund managers in this survey. As an independent authority on asset owners, SWFI feels that it is uniquely qualified and strategy agnostic to show a true “lay of the land”.

DP World and NIIF Joint Venture Embarks on First Investment



Hindustan Infralog Private Limited, the US$ 3 billion joint venture formed in January 2018 between DP World and the National Investment and Infrastructure Fund (NIIF) to invest in ports, logistics and warehousing, agreed to acquire 90% of Continental Warehousing Corporation (Nhava Seva) Limited for US$ 400 million. 10% is being retained by the company’s founders – the Reddy family. Adi Keshav Reddy is the founder of Continental Warehousing. This is the first investment of the Hindustan Infralog platform.

The sellers include Warburg Pincus India Pvt Ltd, International Finance Corporation (IFC) and Aureos Capital, a joint venture between the CDC and Norfund that was acquired by Abraaj Capital.

Barclays, Citi and Detusche Bank advised on the transaction.

Continental Warehousing was formed in 1997 and is one of India’s biggest container warehousing firms – operating container freight stations and private freight terminals across India. In April 2011, Warburg Pincus invested in Continental Warehousing, committing US$ 100 million. In December 2015, IFC invested US$ 25 million in equity and lent US$ 35 million in debt to Continental Warehousing.

In India, DP World has been operating container port terminals since 1997.

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SWFI First Read, March 18, 2018



Surbana Jurong and China Vanke Tie up Deal for Industrial Town Projects

Surbana Jurong, a real estate development company focused on urban projects, inked a deal with China Vanke to partner on new industrial towns in China’s midwest regions. Surbana Jurong is majority-owned by Singapore’s Temasek Holdings. The first joint project is Vanke’s Jianzhou Dream Town in Chengdu. Surbana will provide the design for this project.

PIF Eyes Hollywood Talent

Saudi Arabia’s Public Investment Fund (PIF) is looking at investing in a less than 10% stake in Endeavor, LLC, a talent agency holding entity of WME for a reported US$ 400 million.

Alex Wilmot-Sitwell of BAML Resigns

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Mubadala Invests in No Fly Zone Drone Radar Company



Data Collective led a US$ 15 million Series A round into Salt Lake City-based Fortem Technologies, Inc., a company that works on solutions that can detect, identify and classify drones in real time to maintain airspace safety. Other investors in the round include Boeing, Mubadala Investment Company, Manifest Growth, New Ground Ventures and Signia Venture Partners.

Ibrahim Ajami, Head of Mubadala Ventures said in the press release, ” Mubadala is excited to work with Fortem and its outstanding leadership team to help grow its business to new markets.”

Ajami added, “We strongly believe the TrueView radar is essential to maintain a safe airspace for both the aircraft and the critical infrastructure on the ground.”

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