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SWFI First Read, January 7, 2018

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Chinese Foreign Reserves End 2017 with an Uptick

The People’s Bank of China announced that foreign reserves grew US$ 20.7 billion to US$ 3.14 trillion in December 2017. The central bank announced a full year increase in reserves to US$ 129 billion. Chinese government authorities had enacted measures to reduce monetary outflows out of mainland China. These measures include capital controls and measures to have large state-owned businesses reduce overseas corporate acquisitions. A weaker U.S. dollar could make the Chinese central bank reduce capital controls.

Charles Schwab to Liquidate Schwab Money Market Fund

Charles Schwab Investment Management moved to liquidate its US$ 8 billion Schwab Money Market Fund. The decision was made on December 12, 2017. The money market fund aims to redeem all of its outstanding shares on or about May 25, 2018.

Iranian Oil Tanker Crashes into Cargo Ship off China Coast

Sanchi, an Iranian oil tanker that departed from Iran’s Assaluyeh port on December 16, 2017, crashed with the Chinese cargo vessel CF Crystal off China’s coast near Shanghai. The oil tanker is owned by National Iranian Tanker Company. The tanker was headed to Daesan, South Korea to move roughly 1 million barrels of natural gas condensate.

The National Iranian Tanker Company is a subsidiary of the National Iranian Oil Company. The National Iranian Oil Company was privatized in 2009 and as of 2011 is mostly owned by Iranian pensions.

Apple Products Vulnerable to Meltdown

Cupertino, California-based Apple Inc., a major driver of the U.S. stock market and company owned by many large sovereign funds and pensions, revealed that all iOs devices, such as the iPad and iPhone, as well as Mac computers are affected by chip security flaws. These issues surround vulnerabilities known as Meltdown.

GIC Buys Large Stake in Nordic Aviation Capital

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Singapore’s GIC Private Limited, a yield-hungry sovereign investor, invested in Denmark-based Nordic Aviation Capital A/S, becoming a significant minority shareholder. Other shareholders in Nordic Aviation Capital include EQT VI Limited fund, KIRKBI Invest (wealth origins tied to Legos), and Martin Møller, the founder of Nordic Aviation Capital. EQT VI will remain the largest shareholder of Nordic Aviation Capital. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Trump Wants Pharma Companies to Disclose Drug Prices in Advertisements

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U.S. President Trump is progressing on plans to mandate pharmaceutical companies to reveal their prices in drug advertisements. “The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay,” Health and Human Services Secretary Alex Azar said in a statement. “So while the pharmaceutical industry’s action today is a small step in the right direction, we will go further.”

The U.S. Health and Human Services Department would require pharmaceutical companies to include drugs’ sticker prices in their video advertisements. This would be similar to how drug companies disclose the laundry list of side effects.

Increasingly, sovereign funds like Temasek Holdings have backed mid-stage pharmaceutical companies and other therapies, while market investors like Norway’s GPFG have large holdings in listed pharmaceutical companies.

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Kazatomprom Treads Closer to IPO

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Kazatomprom is the world’s biggest uranium producer, accounting for around 20% of production market share. The company is moving forward on floating up to a 25% company stake for its planned initial public offering in London and Astana, Kazakhstan. Kazatomprom’s IPO plans are subject to market conditions. The global market price of uranium generated significant price gains year-to-date through almost three quarters. So far, during 2018, the uranium spot price has moved from US$ 20 per pound to US$ 27 per pound.

Kazatomprom’s sole shareholder is Samruk-Kazyna. Samruk-Kazyna would retain at least a 75% stake in the company.

Advisors

Credit Suisse and JPMorgan are joint global coordinators and joint bookrunners for the share offering. China International Capital Corporation, Halyk Finance, and Mizuho International plc were joint bookrunners.

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