Institutional Investors (October 16)
Increasingly philanthropic foundations are being designed to expire rather than continue in perpetuity. “50 years ago, spend-down strategies accounted for 5 percent of the total assets of America’s 50 largest foundations, compared with 24 percent in 2010. As the number of ultrawealthy people in the world grows, the number of spend-down foundations is expected to rise.” The Bill & Melinda Gates Foundation is one such foundation as it’s designed to “spend out 50 years after the founders die.”
Bloomberg (February 23)
“Beijing’s interventions in the economy don’t always merit applause, but the government’s unprecedented seizure of Anbang Insurance Group Co. deserves a round. Anbang was a toxic threat to China’s financial system.” With total assets estimated to be “a staggering 3.4 percent of China’s GDP,” Anbang had the potential to deliver a shock “comparable to Lehman Brothers Holdings Inc. or American International Group Inc. in the U.S.” Chinese authorities have “nipped a potential disaster in the bud.”
Tags: AIG, Anbang, Assets, Beijing, China, Economy, Financial system, Interventions, Lehman Brothers, Threat, Toxic
The Economist (September 17)
“Investors outside China have about $1trn invested in firms that use” variable interest entities (VIEs). These include Alibaba and Tencent. Yet, it remains “unclear if VIEs are even legal in China,” exposing investors to two risks. “First, the VIEs could be ruled illegal, potentially forcing the firms to wind up or sell vital licences and intellectual property in China. The second danger is that VIE owners seek to grab the profits or assets held within. If they refuse to co-operate, die, or fall out of political favour, it is far from clear that firms can enforce VIE contracts in Chinese courts.”
Tags: Alibaba, Assets, China, Contracts, Courts, Illegal, Investors, IP, Profits, Risks, Tencent, VIEs
Reuters (July 27)
“British-based investment firms’ long-standing ability to manage billions of euros of assets elsewhere in Europe could be threatened by Brexit.” Newly issued EU guidance suggests regulators will crack down on “delegation” with the aim of preventing investment firms from “setting up ‘empty shell’ subsidiaries in an EU country, to allow them to continue serving European clients, but leaving the bulk of their management staff and operations in London.”
Tags: Assets, Brexit, Clients, Delegation, EU, Europe, Euros, Guidance, Investment, London, Shell subsidiaries, UK
Reuters (July 11)
As its first family fights publicly in an unprecedented and ugly manner, the “shrinking returns” of its sovereign wealth fund, GIC, “are adding gloom to Singapore. The sovereign wealth fund, which manages an estimated $343 billion of assets, has delivered its worst annual performance since 2001 barring the financial crisis.” Moreover, the “outlook is depressing too” as GIC prepares for “a protracted period of low returns.”
Tags: Assets, Fight, Financial Crisis, First family, GIC, Gloom, Outlook, Performance, Returns, Singapore, Sovereign wealth fund, Ugly, Unprecedented
Institutional Investor (June 16)
“Short-termism, often driven by activists, can have grave implications for corporations, for our economy and sometimes for society overall. Innovation, discovery and hiring are curtailed when R&D projects are put on hold or cancelled because of short-term pressures…. Short-termism also leads to mispricing, misallocation of assets and a lack of reliable information about long-term prospects.”
Tags: Activists, Assets, Corporations, Discovery, Economy, Hiring, Innovation, Misallocation, Mispricing, Prospects, R&D, Short-termism, Society
New York Times (April 6)
“The first reaction to the leaked documents dubbed the Panama Papers is simply awe at the scope of the trove” that includes some 11.5 million documents illustrating “how offshore bank accounts and tax havens are used by the world’s rich and powerful to conceal their wealth or avoid taxes.” That reaction quickly gives way to disgust and questions: “How did all these politicians, dictators, criminals, billionaires and celebrities amass vast wealth and then benefit from elaborate webs of shell companies to disguise their identities and their assets? Would there have been no reckoning had the leak not occurred?”
Tags: Assets, Bank accounts, Disgust, Offshore, Panama Papers, Powerful, Reaction. Leak, Rich, Shell companies, Tax havens
The Economist (November 14)
The Great Recession has morphed into the never ending crisis. Over the past decade, we’ve seen fallout from the U.S. housing crisis, the Euro crisis brought on by Greece, and now “a third instalment in the chronicles of debt is now unfolding. This time the setting is emerging markets. Investors have already dumped assets in the developing world, but the full agony of the slowdown still lies ahead.”
Tags: Assets, Crisis, Debt, Emerging markets, Euro crisis, Great Recession, Greece, Housing crisis, Investors, Never ending, Slowdown, U.S.
Financial Times (January 9)
“Investors looking for haven assets are increasingly having to pay up for the safety they provide as the volume of negative-yielding eurozone government debt has swollen to a record €1.2tn.” The change to assets you effectively pay to hold is unprecedented. At €0 in June 2014, this negative-yielding debt now accounts for roughly one quarter of outstanding eurozone sovereign debt, mostly “concentrated among the short-dated debt of core eurozone countries.”
Tags: Assets, eurozone, Government debt, Haven, Investors, Negative-yielding, Safety
LA Times (December 10)
“The emerging sharing economy poses a challenge for government because it doesn’t fit neatly into existing regulatory structures. Individuals put their personal cars, homes and other assets to commercial use on an irregular basis, with the help of companies such as Uber and Airbnb that connect them to customers.”
Tags: Airbnb, Assets, Cars, Challenge, Government, Homes, Regulatory structures, Sharing economy, Uber
