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TREND: More Direct Sovereign Wealth Money Pouring Into BRIC Countries

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Sovereign wealth funds are plowing more money into (Brazil, Russia, India and China) BRIC nations, despite economic and political headwinds in emerging markets. Proprietary data from the Sovereign Wealth Fund Institute shows that more direct sovereign fund investment for 2014 is funneling into BRIC countries compared to similar quarters in 2013. According to the Sovereign Wealth Fund Transaction Database, for the first two quarters of 2013, about US$ 4.37 billion of direct sovereign wealth fund investment was allocated toward BRIC countries. For the first two quarters of 2014, BRIC countries received about US$ 4.62 billion. Furthermore, second quarter figures for 2014 are not fully counted for in the database. The 5.7% increase in BRIC direct sovereign wealth fund investment from those similar quarters indicates that sovereign funds remain tepidly optimistic in these dynamic growth markets. This is on the backstop of tightening economic sanctions from the West against Russia, bad loans on the books of Indian banks, real estate bubbles in China and growing economic disparity in Brazil. This is countered with optimism of India’s new Prime Minister Narendra Modi and Russian President Putin’s clearing of troops from Ukraine’s borders, increasing the possibility of easing economic tension.

In 2013, sovereign wealth funds directly invested US$ 18.5 billion in BRIC countries compared to US$ 11.3 billion in 2012.

Sovereign Wealth Fund Direct Transactions into BRIC Countries – Billions USD

Some recent trends for 2014 describe the onset of Chinese financial and consumer companies attracting sovereign wealth capital, especially from Singapore, the Gulf and Norway (each having an office in China). CITIC Pacific Limited’s capital raise attracted multiple sovereign wealth funds and large institutional investors. Temasek’s investment in India’s Star Agriwarehousing shows the attractiveness of public investor capital in select sectors of the country. In addition, the Russian Direct Investment Fund (RDIF) has been able to lure several sovereign wealth funds on some major deals such as the Ust-Luga LPG Terminal Port transaction.

Sovereign wealth funds have been advocating for increased foreign investor quotas in several emerging markets such as China and India. In May 2014, China’s State Administration of Foreign Exchange (SAFE) gave the Abu Dhabi Investment Authority (ADIA) an additional US$ 500 million in QFII quota. In 2013, sovereign wealth funds directly invested US$ 18.5 billion in BRIC countries compared to US$ 11.3 billion in 2012.

HKMA Intervenes to Support Currency Peg for First Time Since May 2018

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The Hong Kong Monetary Authority (HKMA) intervened to defend its peg to the U.S. dollar. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Genoa Motorway Bridge Collapses

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The 51-year-old Genoa bridge death total has risen to 35 people. On August 14, 2018, a highway bridge, known as the Morandi Bridge, in the center of Genoa had collapsed in torrential rains. The roadway, which was built of reinforced concrete, fell as much as 45 meters. The cause of the collapse was under investigation, according to Angelo Borrelli, chief of the Civil Protection Department. A good number of Italy’s viaducts, galleries and bridges were built during the 1950s and 1960s. Italy-based Autostrade is a motorway operator controlled by Atlantia S.p.A. Autostrade was conducting maintenance work on the bridge. Autostrade said it had been strengthening the road foundations of the bridge.

The Italian Benetton family founded the Benetton Group S.p.A. fashion company in 1965. Sintonia SA is the Luxembourg financial holding company controlled by the Benetton family, which has about a 30.25% stake in Atlantia. Singapore’s GIC Private Limited owns 8.14% of Atlantia as of March 31, 2018. BlackRock holds a 5.12% ownership stake in Atlantia during the same time period.

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Bill Gross Can’t Save Janus Henderson

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Speculation is swirling that legendary bond king Bill Gross could be ousted from the fund he oversees at Janus Henderson (JHG). However, Janus Henderson CEO Dick Weil is firm in his belief that Gross is fit for the position, though he also stated that Gross has been performing in a way that was “challenging and disappointing.” Bloomberg’s Francine Lacqua suggested that Gross could “taint” the overall picture at JHG.

After acknowledging that Gross was struggling, Weil was quick to defend him, pointing to his successful 40 year career in the industry. Weil expects Gross to recover from his current investment woes “in time.” He went on to underscore his unshakable confidence in Gross, “Bill’s a terrific investor, and a terrific, strong player.” Gross, for his part, is said to have admitted to making “bad bets,” according to Weil. Weil was only recently chosen over contender Andrew Formica, his Co-CEO, to serve as sole CEO of the company. Australian-born Formica was dismissed by JHG’s board of directors. JHG’s single largest shareholder is Japanese life company Dai-Ichi Life.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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