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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.

Marina One and DUO Officially Open

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Khazanah Nasional Berhad and Temasek Holdings (Private) Limited announced the official opening of two major building projects, Marina One and DUO. Together the properties have a gross development value of 11 billion SGD. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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SWFI First Read, January 16, 2018

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BP Plans to Take $1.7 Billion Charge to End Legal Claims on Deepwater Horizon

BP Plc is planning to take a US$ 1.7 billion charge to end legal claims regarding the disastrous 2010 Deepwater Horizon spill in the Gulf of Mexico.

Ethereum Co-Founder Leaves Fenbushi Capital

Vitalik Buterin, a co-founder of Ethereum, which is a cryptocurrency, exited China-based Fenbushi Capital. Fenbushi Capital was formed in 2015. Buterin is retaining his role as an advisor of Fenbushi Capital. Buterin dropped out of the University of Waterloo in 2014 when he got a Thiel Fellowship. This permitted him to work on Ethereum full time.

Kingdom Holding Sells Four Seasons Beirut Hotel Stake

Saudi Arabia’s Kingdom Holding sold its position in the Four Seasons Hotel in Beirut for roughly US$ 100 million. Blominvest, a unit of Blom Bank, advised on the transaction. The Four Seasons will continue to manage the property.

Mercer Signs Deal to Buy BFC

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

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Deutsche Bundesbank to Slowly Add Renminbi into Foreign Reserve Mix

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Deutsche Bundesbank’s executive board made a decision to invest in Chinese renminbi in the summer of 2017 as part of its foreign currency reserves. The German central bank on January 15, 2018, confirmed it will start investing in Chinese renminbi and also consider investing in additional foreign currencies. The move mimics the European Central Bank (ECB), which already considers the Chinese renminbi as a reserve currency. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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