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Swiss National Bank’s Twelve Percent Equity Allocation

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Twelve percent of the Swiss National Bank’s (SNB) foreign reserves are allocated to global equities. Of that allocated percentage, the majority is invested directly by the Swiss central bank. Some SNB board members feel the equity allocation is too high with regards to stated diversification goals. In fact, some acknowledge that a zero to five percent allocation in equities would be sufficient enough for a central bank’s reserve diversification to reduce the risk profile. Central banks and monetary authorities are far more conservative than sovereign wealth funds when it comes to asset allocation.

The Swiss National Bank currently manages foreign currency reserves of 424.4 billion CHF.

Among Occidental monetary authorities, the SNB was seen as a forerunner when in 2004, it allowed a portion of foreign reserves to be invested in public stocks. The SNB does not buy stocks in Swiss companies. Before that change in allocation policy, the majority of SNB’s reserves were invested in fixed income instruments and gold. The SNB assesses new asset classes and other currencies in order to reduce risk concentration in developed markets.

SNB Foreign Reserve Allocation as of September 28, 2012

  • Government Bonds 83%
  • Other Bonds – 5%
  • Equities – 12%

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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