The world’s biggest sovereign wealth fund outperformed its benchmark to deliver a return of 2.6 per cent in the second quarter.
Norway’s $975bn fund was buoyed by equity markets, which returned 3.4 per cent, while bonds delivered 1.1 per cent and its property investments 2.1 per cent..
Nestlé, China’s Tencent, and Novartis made the biggest positive contributions in the second quarter while General Electric, AT&T and IBM made the most negative ones.
Trond Grande, the fund’s deputy chief executive, said:
“The stock markets have performed particularly well so far this year, and the funds return in the first two quarters was 6.5 per cent. This gives a total return of NKr499bn, which is the best half year return measured in Norwegian kroner in the history of the fund. We cannot expect such returns in the future. The record-high return is primarily due to the fact that the fund has become so large.”
The fund is invested 65.1 per cent in equities, 32.4 per cent in bonds, and 2.5 per cent in property.
As Ukraine’s crackdown on corruption continues, three lawmakers from Ukraine’s ruling party revealed this week that they own a combined $45 million in bitcoin, according to a report by RIA Novosti, a Russian foreign news service.
Their holdings came to light during mandatory financial disclosures by members of the Ukrainian parliament, part of an IMF-approved strategy to tamp down corruption in Ukraine. The country’s democratic institutions, which were never very robust to begin with, have been further destabilized by the civil war that’s seen pro-Russian separatists seize control of two regions in eastern Ukraine. Lawmakers must now disclose their assets and wealth in an online database.
Dmitry Golubov possesses the most bitcoin, with 8,752 BTC, an amount worth roughly $36 million at current prices, according to CoinDesk. Alexander Urbansky possesses 2,494 BTC, or $10.3 million, while Dmitry Belotserkovets owns 398 BTC, or $1.6 million.
Investors in exchange-traded funds have garnered increasing sway over emerging-market stocks and bonds, Citigroup said this week, underscoring the swelling importance to global markets of passive instruments.
ETFs that track EM assets now have almost $250bn dollars under management, with $196bn in equities and $48bn in fixed income, according to the US bank’s calculations. That represents close to a fifth of total emerging-market mutual fund AUM. Just two years ago, the figure was just above 12 per cent (see chart above).
The figures highlight how the boom in passive investing is not limited just to developed markets that have more liquid assets. In fact, the sixth-biggest ETF by assets tracks emerging markets stocks, data from ETF.com show.
“ETF flows themselves increasingly representative of asset class sentiment as a whole,” notes Citi’s Luis Costa.
The growth in ETFs appears to have contributed to the drop in global equities and rates volatility, he added, cautioning though that “vol spikes may become nastier than the ones from the past.”
While the long-term consequences of Trump’s first trade war salvo launched today will become obvious only in hindsight, it may have come at an opportune moment: just as China prepares to flood the world with record amounts of steel. Overnight, the National Statistics Bureau reported that even as Beijing intensified its war on smog, local steel output “paradoxically” hit a new monthly record in July, some 74.02 million tonnes, up 10% Y/Y (or 50% more than China’s GDP) and higher than the previous record of 73.23 million tonnes set in June.
While so far the rout from the North Korea crisis has impacted global volatility first and foremost, with the VIX surging 50% (a rather pointless metric considering where the VIX was just days ago) on a modest drop in the S&P which earlier this week was making new all time highs, as massive short vol positions have been rapidly unwound, one trader believes the next place of impact is the sector which has so far emerged, so to say, largely unscathed from rising risk concerns: emerging markets, the clear outperformer so far in 2017.
In his latest overnight Macro View, Bloomberg’s Mark Cudmore writes that “Rightly or Wrongly, EM to Bear the Brunt of Selloff”, and considering the overnight plunge in Chinese stocks, which as discussed earlier just suffered their biggest drop of the year led by the commodity sector…
… he may be right.
His full note below.
Rightly or Wrongly, EM to Bear the Brunt of Selloff
Chinese crude oil imports in July dropped to their lowest level in seven months, although they rose 12 percent on an annual basis, according to calculations made by Reuters on the basis of China’s customs data.
Last month China imported some 34.66 million tons of crude oil, or around 8.16 million bpd, which—according to Reuters calculations based on China’s General Administration of Customs data—was the lowest level since January.
Crude oil imports in the first seven months of this year increased by 13.6 percent at 247 million tons.
The total trade data for July had analysts worried that China’s economy may have started to show signs of slowdown. Both exports and imports increased less than expected, making analysts wonder if global demand growth has started to slow down, or if China’s July trade figures should be attributed solely to one-off or seasonal factors.
China Mobile proposed a special dividend on Thursday to mark the 20th year since its Hong Kong listing after first-half profits at the state-owned telecommunications group beat expectations.
Net profit at China Mobile rose 3.5 per cent year on year in the six months ended June to Rmb62.7bn ($9.4bn), edging out an average estimate of Rmb62.1bn from economists surveyed by Bloomberg.
Operating revenue rose 5 per cent year on year to Rmb388.9bn, with Rmb348bn of that coming from telecoms revenues, up 6.9 per cent.
The company also proposed a special dividend of HK$3.2 per share, in addition to its interim dividend of HK$1.623 per share, “celebrating the 2oth listing anniversary” of the Chinese telecoms provider.
Hong Kong-listed shares in China Mobile jumped as much as 5.8 per cent at the start of the afternoon session after ending morning trading down 0.5 per cent.