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SWFI First Read, June 11, 2018

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UK FCA Courts Saudi Aramco Listing with Possible New Category

The U.K. Financial Conduct Authority (FCA) signaled it was moving forward to develop a new category for premium listings of state-controlled enterprises. Finance experts see this as a move to entice Saudi Aramco to list in London.

BlackRock Forms First Onshore Equity Fund in Mainland China

BlackRock, through its unit BlackRock Investment Management (Shanghai) Co Ltd, formed its first onshore equity fund in China. The fund is called the BlackRock China A-Share Opportunities Private Fund 1 and is aimed at institutional investors and high-net-worth investors. BlackRock participates in the Shanghai-Hong Kong Stock Connect.

Schroders Hires Michelle Han

Schroders plc hired Michelle Han as head of marketing for the Asia-Pacific region. Han is based in Singapore. Before this role, she worked at the Capital Group, a U.S.-based asset management company.

Workers’ Compensation Fund Set for Logan Circle Mandate

The Wyoming State Loan and Investment Board oversees a number of funds, including the Common School Permanent Land Fund and Permanent Mineral Trust. The investment board awarded an approximate US$ 300 million mandate to Logan Circle Partners for a long-duration credit fixed income for the Workers’ Compensation Fund.

Savings Deposit Insurance Fund of Turkey Converts Foreign Currency Portfolio to Turkish Lira

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Maiden Lane I Ends, Federal Reserve Aims to Shrink Balance Sheet

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The U.S. Federal Reserve’s balance sheet has been set to decline automatically since 2017, as the central bank has been liquidating funds from its US$ 4 trillion in Treasury bonds and mortgage-backed securities. As holdings matured, the Fed refrained from reinvesting them. This amounts to US$ 40 billion in monetary tightening monthly. Meanwhile, interest rates have slowly, and continuously, risen. The maturation of these Fed assets could exert upward pressure on long-term yields.

Mortgage rates, applications, and home sales have been falling, likely due to the rising rates. While rates are still historically low, U.S. President Trump has criticized the rate hikes. However, the Fed has no interest in changing course, and rates are set to continue to rise. According to Fed meeting minutes, “The Chairman suggested that the Committee would likely resume a discussion of operating frameworks in the fall.”

The size and content of the Fed balance sheet going forward will be a point of discussion for Chairman Jerome Powell. While there is no end in sight for the Fed’s plans to tighten economic policy, changing conditions may warrant further examination. With the U.S. stock market thriving, there is no indication that tightening has had a material impact on the economy. However, conventional wisdom asserts that the Fed will raise rates “until something breaks.” Market commentators have also suggested that, in the event of an emergency, the Fed will have a harder time stepping in due to the size of its balance sheet. A large part of the Fed’s monetary strategy is based around communications, and Fed-watchers have made a habit of hanging on every word. The Fed announced a shrinking balance sheet well in advance, and made gradual moves in that direction. The process has been smooth thus far. The Fed’s tightening will reach its peak, US$ 50 billion, in October. It is unclear exactly how much stimulus is still needed in the economy to reach the Fed’s 2% inflation target. The Fed’s easing policies have been criticized for the lopsided benefits they provided, more for Wall Street than Main Street. However, the easing will reduce their role in the market.

The End of Maiden Lane I

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QIA Gets a New CEO

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Sheikh Abdullah Bin Mohammed Al-Thani exited as CEO of the Qatar Investment Authority (QIA). He has been appointed as minister of state by Amiri Order No. (4) of 2018.

Mansoor bin Ebrahim Al-Mahmoud is appointed as the new CEO of QIA. He held positions in various organizations such as CEO of Qatar Development Bank and worked at Qatar Museums.

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SWFI First Read, September 19, 2018

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QIA Eyes Investment in Chinese Lender Lufax

The Qatar Investment Authority (QIA) is in talks about a possible investment into Shanghai-based Lufax, one of China’s largest online lenders. The seller of the possible stake is China’s Ping An Insurance (Group) Co. Ltd. Lufax’s official name is Shanghai Lujiazui International Financial Asset Exchange Co. Ltd.

Wealth Funds Back Hotpot Giant

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