Sovereign wealth funds and pension funds around the world have increased investment losses last year, and long-term real estate investments, which have increased their proportion, are expected to make capital allocation demands difficult.
According to the Global Public Fund (SWF) report on state-owned investment vehicles, the value of assets under management of sovereign wealth funds fell from $11.5 trillion to $10.6 trillion last year, and the value of assets under management of public pension funds fell from $22.1 trillion to $20.8 trillion last year. The dollar has lost more than 10% of its value, Reuters said on the 1st.
The SWF report revealed that Denmark's pension fund, ATP, had plunged 45%, estimating a loss of $34 billion to Danish pensioners.
The report analyzed 455 state-owned investors with assets totaling $32 trillion.
"If financial markets continue to decline in 2023, sovereign funds are likely to remain 'chasing the elephant' as an effective way to meet capital allocation requirements," the report said of the management crisis.
Global SWF analyst Diego López said of this more than 10% decline in value last year, "the main driver is the 'simultaneous and significant' corrections that the major bond and equity markets have been experiencing." Losses or some funds will not be able to fulfill their role as long-term investors," he told Reuters.
Sovereign wealth funds and pension funds saw an increase of 12% in investment losses last year compared to the previous year (2021), with the money being concentrated on buying companies and real estate infrastructure.
The report revealed a record $257.5 billion in company-acquired real estate and infrastructure investments in 743 deals, and a record increase in 'mega deals' of more than $1 billion by sovereign wealth funds.
Singapore's largest GIC fund is worth $690 billion, with 72 deals recording over $39 billion in spending on such real estate infrastructure.
In particular, the report revealed that more than half of the GIC Fund's investment was concentrated in 'logistics real estate', "accumulated in real estate with a clear bias."
The top 10 investments by state-owned investors from around the world were concentrated last year, and half of them were concentrated in five cases, which shows excessive fund investment.
In particular, Singapore's Temasek spent $7 billion in January last year to acquire Element Materials, a testing, inspection and certification company from private equity fund Bridgepoint, which signaled a focus on infrastructure investment, the report said.
Macquarie, which has entered Korea, jointly invested in the UK's national grid gas transmission and metering sector with Canada's BCI in March last year and agreed to acquire a 60% stake.
Italy's CDP Equity Asset Fund spent $4.4 billion on Autostrade per l'Italia, along with US private equity funds Blackstone and Macquarie, over the next two months.
The report said that last year in the Middle East, sovereign wealth funds and pension funds in the Gulf region, such as ADIA, Mubadala, ADQ, PIF, and QIA, focused on acquiring these companies in pursuit of Western oil companies receiving large amounts of oil revenue funds last year.
The Global Public Fund (SWF) is a global public fund fund (SWF) that governments of each country use as a part of these funds against the background of the accumulated expansion of public reserves (foreign exchange reserves and government surplus funds) and the increased recognition of opportunity costs caused by exports of natural resources such as oil and diamonds and trade surpluses. to create and establish a separate public fund (Sovereign Wealth Fund, SWF) and operate it with the goal of maximizing mid- to long-term returns rather than focusing on short-term safety through various investment strategies.
SWF funds are applied to fine-tune the volatility and adverse effects of government spending and the real economy in the gap between economic recession and boom by differentiating and managing foreign exchange reserves in each country.
Investment bank Morgan Stanley made the global public fund (SWF) worth $2.5 trillion last year, larger than global hedge funds ($1.5 trillion to $2 trillion), and the US mutual fund industry ($10.4 trillion). dollar) was estimated at one-fourth.
Regarding the new year's world economy, IMF President Kristalina Georgieva told CBS at a New Year's conference that "it will be more difficult than the year we left," as the three major economies, the US, EU and China, are slowing down at the same time.
"For the first time in 40 years, China's growth rate in 2022 will be below global growth," he said, adding, "It will be quite stressful for the Asian economy in particular." It was 2.7%, down 1.1% from the previous forecast of 3.8% in January.
The IMF put Korea's growth rate at 2.0% in October, and the South Korean government further lowered the 2023 growth rate to 1.6% in December.
The National Pension Service announced the size of the national pension as 915.3 trillion won with a loss of about 51 trillion won at a return of -5.29% by the end of October of last year.
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