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Tony Tan Named Director and Special Advisor of GIC

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Singapore’s GIC Private Limited named Dr Tony Tan Keng Yam (Tony Tan) as director and special advisor to the wealth fund, effective January 1, 2018. Tan was the former Deputy Chairman and Executive Director of GIC from September 2005 to June 2011. In 2011, he went on to serve as the 7th President of Singapore until August 31, 2017.

In a press release, Lim Chow Kiat, Chief Executive Officer of GIC, said, “As Special Advisor, Dr Tan will provide much value in broadening and strengthening GIC’s network of senior statesmen and leaders of corporations and institutions who may be constructive in advancing the business and interests of GIC. We will also benefit from his extensive knowledge and perspectives on global matters.”

Manager of China’s Foreign Reserves Could be CalPERS Next CIO

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Numerous financial media outlets, including the Wall Street Journal (WSJ), are reporting that Ben Meng is in key position to become Chief Investment Officer of CalPERS. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Mubadala Surpasses $225 Billion in Assets, Post-ADIC Merger

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Abu Dhabi-based Mubadala Investment Company released its pro forma half-year 2018 financial and operational highlights. What’s interesting to note is that the financials now include the figures from the Abu Dhabi Investment Council (ADIC). ADIC merged into Mubadala a while back. Total assets of Mubadala, which now include ADIC, totaled 832 billion AED (US$ 226.484 billion), while total equity was at 583 billion AED for the period ended June 30, 2018. Profit for the half year period totaled 10.9 billion AED. Mubadala is in the midst of portfolio realignments. The state-owned entity took over International Petroleum Investment Company (IPIC) and then ADIC.

According to the release, Group Chief Executive Officer and Managing Director, Khaldoon Khalifa Al Mubarak, said, “In the first half of the year, we continued to deploy capital in new sectors and geographies, in line with our long-term strategy. We also monetized select assets at good valuations, to deliver financial returns. And, the decision to bring the Abu Dhabi Investment Council into the Mubadala Group has increased the scale and breadth of our portfolio.”

For Mubadala, some of these changes include investing more in technology and ramping up capital spending in the petrochemcial sector. During the first half of 2018, Mubadala revealed plans to form a US$ 400 million venture fund to invest in leading European technology companies. Mubadala also increased activity in Silicon Valley by backing startups and founder-led growth companies.

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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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