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Will There Be Another Sovereign Wealth Selloff Wave?

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oiljack

Macroeconomists, asset manager CEOs, market pundits and media commentators expressed concern about wealth funds and their current impact on global equity markets. However, the selling by commodity-based funds, specifically in the wealthy GCC region, started in the midst of 2015. Funds such as Mubadala Development Co. and the Qatar Investment Authority (QIA) were looking to sell off non-core assets to shore up cash and improve profits. For example, the QIA put Miramax on the selling block, while lowering its equity ownership in French builder Vinci. It is fair to say not all commodity-based sovereign funds are in sell mode. Countries with commodity-based wealth funds which demonstrate well-diversified economies, or have smaller populations, may be in a better fiscal position in a world with low oil prices.

Oil-based wealth funds had their heyday starting in 2004, collecting massive amounts of petrodollars and then doling them out to fund managers, buying trophy assets, bailing out financial institutions and acquiring sizable stakes in companies.

Norway’s Government Pension Fund Global (GPFG) stated numerous time publicly, they remain committed to markets and to not retreat. The Nordic behemoth has a significant allocation to listed equities, exposed greatly to the FTSE 100. Furthermore, the adventurism in emerging market allocations have proved frustrating with Norway’s wealth fund, as markets in Latin America and parts of Asia have taken hits.

The question looms, how long can sovereign funds hold out, before an even bigger selloff?

Good Ole Days

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CPPIB Partners with Lendlease on £1.5 Billion U.K. Build-to-Rent Venture

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The Canada Pension Plan Investment Board (CPPIB) has announced the launch of a £1.5 billion venture with Australian listed construction giant Lendlease Group centered around the development of build-to-rent private housing in the United Kingdom. The new infusion of capital will bolster the £800 million already committed to various projects in the Britain’s housing sector by Lendlease, which will develop, construct, and manage homes built through the partnership.

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Mubadala-Owned Falcon Bank to Begin Accepting Blockchain

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Zurich-based Falcon Private Bank Limited, which is owned by Abu Dhabi-based Mubadala Investment Company, has announced that it will now be accepting wealth originating from new and existing clients’ blockchain assets, reaffirming its position in the private banking industry as a first-mover in adopting distributed ledger technology. Assets will be accepted provided that they pass required due diligence to ensure full compliance with anti-money laundering (AML) and know-your-client (KYC) regulations and laws. The Swiss bank’s auditor PricewaterhouseCoopers (PwC) has reviewed the process, according to a press release.

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Khazanah Launches Sukuk Exchangeable into Citic Shares

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Malaysia’s Khazanah Nasional pushed out an exchangeable sukuk to raise US$ 309.4 million to US$ 320.8 million. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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