Which geographic regions will impact U.S. Treasuries more in 2018, China, Middle East or Europe? According to data from the U.S. Treasury department, China is the largest foreign holder of U.S. government debt, holding US$ 1.9 trillion as of October 2017.
There is a level of worry that Beijing could dump its gigantic holdings of U.S. Treasuries to punish the United States as a form of financial weaponry, but so far this has come to nothing. However, historically, China’s massive pool of foreign reserves have been stable and they could be looking to rebuild its liquid portfolio after tapping it in 2016. Furthermore, others argue that for China’s own financial stability, they need to hold a lot of U.S. Treasuries – still perceiving the U.S. as the most trusted safe haven in the first world (strong private property rights, market depth liquidity and transparency relative to other sovereign debt).
At the start of 2018, Bloomberg had reported that sources told them that China was reviewing and could possibly halt purchases of U.S. Treasuries. China’s State Administration of Foreign Exchange (SAFE) released a statement on the topic of China considering a slowdown or halt of purchases of U.S. Treasury bonds as incorrect information. SAFE commented, “The news could quote the wrong source of information, or may be fake news.”
Should We Be Looking at Europe?
In 2016 and 2017, one of the largest demand sources for U.S. fixed income assets came from the eurozone, beating out China. The reasons are manifold and not clearly apparent at first look. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
Atlas Merchant Capital LLC and Singapore’s GIC Private Limited acquired just under a 25% equity stake in Dresher, Pennsylvania-based Ascensus, the largest independent recordkeeping services provider, third-party administrator, and government savings facilitator in the United States. San Francisco Genstar Capital LLC and New York-based Aquiline Capital Partners LLC were the sellers of the shares in Ascensus and will maintain control over the company.
Atlas Merchant Capital LLC was founded by Bob Diamond and David Schamis. Diamond is the former group chief executive of Barclays plc.
GIC is an investor in Alight Solutions, a provider of human capital solutions.
Barclays acted as the lead financial advisor and J.P. Morgan acted as financial advisor to Ascensus in connection with this transaction. Willkie Farr & Gallagher LLP acted as legal counsel to Ascensus.
Debevoise & Plimpton LLP acted as legal counsel to Atlas Merchant Capital and Sidley Austin LLP acted as legal counsel to GIC.
In 2015, JC Flowers sold Ascensus to Genstar Capital and Aquiline Capital Partners.
The Value of Research: Skill, Capacity, and Opportunity
This article is sponsored by S&P Dow Jones Indices.
How much should a portfolio manager be willing to pay for research? The question is of importance to any manager, but has become particularly pertinent since newly imposed European rules require that the costs of investment research—previously offered by many investment banks as an in-kind consideration in return for brokerage business—be unbundled from trading.
Unfortunately, attempts to determine a fair value for research in the most general circumstances are doomed to fail. Even if we only consider direct recommendations to buy or sell certain securities, the value of such recommendations to a portfolio manager will vary according to the absolute size of positions taken in response. Instead, we provide a framework for estimating relative research values across markets and constituents, under certain stylized (but reasonable) assumptions.
REPORT: The Value of Research: Skill, Capacity, and Opportunity
Malaysia’s Khazanah Nasional Berhad is prepping to declare more than 1 billion MYR in a dividend payout to the Malaysian government for 2019. Khazanah Nasional is undergoing a significant strategy shift to focus more on domestic assets, while selling off venture tech investments, overseas real estate, fund investments, and other non-strategic assets. The wealth fund also plans to scale back its overseas presence in markets such as San Francisco and London.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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