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Will the Oil Retreat Shift Sovereign Fund Allocation?

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Russia, Abu Dhabi and Norway seem to think so.

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For the first time since April 2016, the price of oil dipped below US$ 40 per barrel – causing headache among some oil-based sovereign funds. Tumbling down from a June 2016 high of US$ 51.23 per barrel, oil prices then reversed course. The price of oil is an essential ingredient that impacts commodity-based economies, translating into pleasure or pain for a country’s citizens. For example, Russia’s Reserve Fund was marked down to US$ 38.18 billion at the end of July 2016, versus having US$ 38.22 billion in assets in the beginning. Oil industry analysts predict the crude price drops can be explained by an overall decrease in global trade, mixed in with the buildup of excessive storage of crude oil and gasoline. In addition, the Libyan and Iranian governments have made headway in becoming larger contributors to the world oil economy. Libya’s state—owned National Oil Corporation plans to work with the unity government to reboot exports from the ports of Ras Lanuf, Es Sider and Zueitina. Furthermore, Saudi Aramco lowered its oil prices to compete for Asian businesses against Russia and the United Arab Emirates. The state-owned oil giant said it plans to sell cargoes of Arab Light oil at US$ 1.10 per barrel in September – a price cut from US$ 1.30 per barrel for August.

Sovereign Wealth Funds

According to Episode 15 of “Follow the Money”, the hosts discuss the low or negative returns of wealth funds in latest fiscal year. The annual returns will no doubt have an impact on future allocation. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Japanese Government Capital Provides Initial Life for Texas Bullet Train

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Dallas-based Texas Central Partners, LLC is the developer of a proposed high-speed rail system, dubbed the Texas Bullet Train, between Dallas and Houston. Project costs are estimated between US$ 12 billion to US$ 15 billion. The developer secured US$ 300 million in project loans from Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN) and the Japan Bank for International Cooperation (JBIC). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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DOJ Investing Tesla Over Musk Comments

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The U.S. Department of Justice (DOJ) is conducting a fraud investigation over Tesla as its CEO Elon Musk made public statements on twitter. This is a criminal probe. In addition, earlier, SWFI reported the U.S. Securities and Exchange Commission (SEC) is conducting a civil inquiry into Elon Musk regarding his statements.

This all surrounds Musk tweeting in August that he was thinking of taking Tesla private and had “funding secured” for the transaction. Both government authorities are seeing if Musk misled investors and violated federal securities laws with his public statements.

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Marsh & McLennan Companies to Acquire JLT Group

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Marsh & McLennan Companies, Inc. (MMC), a global professional services firm offering clients advice and solutions in risk, strategy and people, announced that it has reached an agreement to acquire Jardine Lloyd Thompson Group plc (JLT), a provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services. The transaction has been approved by the Board of Directors of each of MMC and JLT. JLT’s largest shareholder, Jardine Matheson Holdings, and JLT directors who collectively represent 40.5% of the issued and outstanding JLT shares in support of the transaction.

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

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