SWFI First Read, January 7, 2018
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.
Private equity firm BC Partners hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to advise on the sales of Acuris. Acuris is a collection of financial news and data sites, which includes Mergermarket, Dealreporter, and Debtwire. In 2017, BC Partners sold around a 30% stake in GIC Private Limited.
Before the rebranding to Acuris, Mergermarket was part of The Financial Times Group until 2013 when it was sold off to BC Partners.
Aflac Inc. is an American insurance company founded in 1955. The company is the biggest provider of supplemental insurance in the United States. Aflac also has major operations in Japan.
In December 2018, Japan Post Holdings (JPHLF) signaled it was spending US$ 2.64 billion for a 7-8 % stake in Aflac. The goal is that, in four years time, Aflac will become an affiliate of Japan Post. Japan Post hopes to accomplish this by becoming the largest voting shareholder of the company. The world’s 13th largest company, with 400,000 employees, Japan Post needs to expand to chase further growth, mainly because Japan Post expects the postal business to decline. Diversification is seen as the optimal route to long term stability for the holding company. Japan’s economy is worrying. Japan’s aging population means that many insurance companies are facing a shrinking customer base, Japan Post settled on a plan to expand overseas.
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The Russian Direct Investment Fund (RDIF) and the Development Agency of Serbia, also known as Razvojna agencija Srbije, reached an agreement to work together to identify attractive investment projects to strengthen bilateral economic ties and increase investment flows between Russia and Serbia. Russian capital and businesses are keen on investing in Serbia.
In addition, the two countries signed an agreement to cooperate on civil nuclear energy, according to state-owned Russian reactor builder Rosatom (Rosatom State Nuclear Energy Corporation). Rosatom continues to expand it business of nuclear cooperation deals in a wide number of countries.
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