SWF Radar

Thomson Reuters reports that, “Countries including France need to be pragmatic and open their arms to sovereign wealth funds but must tread cautiously to weed out the good from the bad, the chief executive of state bank Caisse des Depots said on Wednesday.”

Thomson Reuters reports that, “German services trade union Verdi is open in principle to a takeover of Dresdner Bank by China Development Bank (CDB), it said on Wednesday.”

The article quotes a union spokesperson as saying that, “The main thing for us is jobs preservation. Any plan that eliminates jobs is for us a bad plan.”

The article is based on an article (German language) (subscription required) published today by the Frankfurter Allgemeine Zeitung (FAZ).

The FAZ today published also a backgrounder (German language) on the CDB.

Thomson Reuters reports that, “German railway operator Deutsche Bahn, which is planning an initial public offering, has signed a deal [with Qatari Diar Real Estate Investment Co, a unit of the country’s sovereign wealth fund Qatar Investment Authority (QIA),] to help design a multi-billion dollar rail network in the Gulf Arab state of Qatar.”

Thomson Reuters reports that, “Sovereign wealth funds will likely plough more money into capital-starved financial firms if they see long-term value, said a regional executive on Wednesday at one of the world’s biggest institutional money managers [Hon Cheung, regional director of the Official Institutions Group in Asia at State Street Global Advisors].”

AFP reports that, “Singaporean sovereign wealth fund Temasek Holdings has received approval from US anti-trust regulators to raise its stake in Merrill Lynch, a source said Wednesday.”

Afrique en ligne reports that, “Citing the case of the Libya’s African Investment Portfolio (LAP), which has raised more than US$ 8 billion for investments across Africa’s most productive sectors, [Kenya’s Metropolitan Development Minister Mutula Kilinzo said Tuesday that] sovereign bonds was an option that most cities in Africa should emulate.”

Rachel Ziemba of RGE writes (filling in for Brad Setser at his blog) that, “Reports from [Norway’s Government Pension Fund-Global and Singapore’s Temasek Holdings]… give us some clues as to how other, less transparent sovereign investors might be faring in the current market. [Apparent losses by these investors] might call into question the expected rate of growth of such funds. Furthermore they raise the question of whether the risk management operations of these funds are up to the challenge.”

AFP reports that, “China’s national pension fund [the National Social Security Fund] is in talks with CITIC Capital Holdings to set up a private equity fund worth up to five billion yuan (730 million dollars), state media reported Wednesday.”

The WSJ’s Deal Journal blog writes that, “China is creating a merger law to protect its national security–setting up a review process similar to the Committee on Foreign Investment in the U.S., or CFIUS.”

The Guardian writes that, “Anshukant Taneja, who covers Temasek for ratings agency Standard & Poor’s, said [Temasek Holdings] had increased its exposure to unpredictable asset cycles and contagion.”

Seeking Alpha asks, “[S]hould concerns about moral hazard apply to central bank reserve managers and sovereign wealth funds?”

Bloomberg reports that, “Temasek Holdings Pte, Singapore’s $130 billion sovereign wealth fund, said the global credit crisis will last two more years, drying up investment opportunities and constraining economic growth.”

That does beg a question or two.

Aftenposten reports that, “[The Norwegian Government Pension Fund–Global’s] chief Yngve Slyngstad said Tuesday that the fund’s total Fannie Mae and Freddie Mac exposure amounts to about NOK 88 billion (USD 16.36 billion).”

It quotes Slyngstad as saying that, “Eighty-eight billion (crowns) is relatively little in relation to other central banks, but it is that big because we consider this the second most secure investment in the United States.”

The Financial Times writes that, “The Oil Stabilisation Fund was established in 2000 to collect windfall earnings. But the OSF’s assets are a mystery.”

Thomson Reuters reports that, “Singapore sovereign fund Temasek, which spent billions of dollars on shares in Merrill Lynch, sees value in banking stocks in the United States and Britain, a senior executive said on Tuesday.”

Bloomberg writes that, “Singapore’s slowest economic growth in five years hasn’t stopped the city-state from expanding its stake in a shrinking Merrill Lynch & Co.”

Thomson Reuters reports that, “Oil-rich Norway is pushing ahead with plans to use part of its $400 billion sovereign wealth fund to invest in renewable energy development, a deputy finance minister said on Monday.”

Seeking Alpha writes that, “Temasek, Singapore’s second-largest sovereign wealth fund, [SWF] is certainly doing far better than Singapore exchange-traded funds such as the iShares MSCI Singapore (EWS) that is down almost 17% year-to-date. The lesson is that it pays to play as a big boy with lots of cash and negotiating leverage.”

The Financial Times reports that, “South Korea’s top financial regulator [the Financial Services Commission] on Monday warned that Korea Development Bank should take a “cautious” approach to buying an overseas bank, following the state-run group’s expression of interest in Lehman Brothers .”

Thomson Reuters writes that, “[Chinese-language Apple Daily reports that] Sources say the Hong Kong Monetary Authority [HKMA] has formed a new group dedicated to bringing in high-risk alternative investment products to the Exchange Fund portfolio in a bid to boost its investment return.”

The Australian writes that, “Chinese investment in Australian resources is like a political chess game, full of subtle moves and counter-moves for a long-term strategic play.”

The Australian reports that, “[Australian treasurer] Wayne Swan has given approval for the Chinese government-owned mining giant Chinalco to acquire up to 11 per cent of the Rio Tinto group in the first high-profile test of the Rudd Government’s stance on more than $30 billion of Chinese foreign investment bids.”

The Telegraph reports that, “China’s central bank [the People’s Bank of China (PBOC)] has acquired a secret [1 percent] stake in Prudential, Britain’s second-­largest insurer, as part of Beijing’s increasingly active plans to deploy its vast pool of foreign currency reserves in overseas markets, The Sunday Telegraph has learned.”

The Yomiuri Shimbun reports that, “The [Japanese] government is planning to establish a sovereign wealth fund in fiscal 2009 that would place priority on innovative technologies using new energy sources and natural resources, government sources said Saturday.”

Here’s more from the Yomiuri Shimbun.

Thomson Reuters reports that, “Qatar’s property investment arm Qatari Diar is close to launching syndication of a 1.7-billion-euro ($2.5 billion) loan to finance the Gulf state’s acquisition of French engineering company Cegelec, [London-based Middle East Economic Digest (MEED)] reported [on Friday].”

Here is the MEED article (subscription required).

The Financial Times reports that, “Investments by Russian companies and sovereign wealth funds into the US are likely to face tougher scrutiny in Washington in the wake of the country’s conflict with Georgia, experts predict.”

The article adds that, “Gazprom, the energy giant majority-owned by the Russian government, said in June that it was considering building its presence in the US through acquisitions. Any attempt by Gazprom to invest in the US was already likely to be closely examined by the Committee on Foreign Investment, or Cfius, the executive branch agency that investigates sensitive deals on national security grounds. But Cfius is now likely to view such a transaction even more sceptically.”

The New York Times’ DealBook blog has published a backgrounder on the Korea Development Bank (KDB).

Thomson Reuters reports that, “A South Korean government official confirmed on Friday that Korea Development Bank [KDB] had considered buying a stake in Lehman Brothers, but talks with the U.S. bank had not developed to the point of discussing details.”

The Financial Times reports that, “China will speed up restructuring of its state-owned enterprises in the second half of the year, forcing mergers of large conglomerates and accelerating sales of non-strategic assets across a wide range of sectors, say senior government officials.”

Daniel Drezner asks whether the recent chatter about authoritarian capitalism is warranted.

The Economist writes that, “While Saudi Arabia sets up its first sovereign wealth fund, ordinary Saudis are more preoccupied with the rising price of food. This is prompting the Saudi government to consider a new direction for foreign investment: buying farms in the poorer parts of the world.”

Portfolio.com asks, “Why would a sovereign wealth fund that poured $5 billion into Merrill Lynch eight months ago want to invest even more money after seeing Merrill’s shares fall by more than half?”

Property Week reports that, “The UK’s second largest quoted property company [British Land] revealed today that GIC had increased its stake to just above 5%, buying more than 5m shares to increase its holding to 26m shares valued at £184.9m.”

Arabian Business reports that, “State-owned Dubai Properties is set to almost double its real estate investment to 1 trillion dirhams ($272.2 billion) within the next five years from 565 billion dirhams currently, its group CEO has said.”

Thomson Reuters reports that, “Singapore sovereign wealth fund Temasek Holdings, which has pumped billions of dollars into ailing lenders such as Merrill Lynch & Co Inc, said it may invest more in Western banks if the opportunity arose.”

Arabian Business writes that, “Dubai leisure and entertainment giant Tatweer is to launch a new company to focus on the development of its international investment strategy, its executive chairman has told Arabian Business.”

UK shadow chancellor George Osborne said in a speech at the UK think tank Demos yesterday that, “A third of developed countries now have a national investment fund instead of national debt. Yet sadly the idea of a British Sovereign Fund investing for the generation who come after us is a distant dream.”

In January this year Osborne hinted at the need for a UK sovereign fund.

Thomson Reuters reports that, “Singapore sovereign fund Temasek’s assets were worth S$185 billion ($131 billion) at the end of March, Temasek’s chairman S Dhanabalan said on Thursday, up 13 percent from a year earlier.”

Thomson Reuters reports that, “State-owned Korea Development Bank (KDB) on Thursday declined to comment on a report that it had held secret talks to buy shares in Lehman Brothers but had walked away from the discussion due to pricing disagreements.”

Thomson Reuters reports that, “CITIC Securities, China’s biggest brokerage, said it had held no formal talks about buying a stake in Lehman Brothers and will focus on its domestic business this year due to concerns about snowballing U.S. credit problems.”