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Global public investors predict best returns from Asia Pacific

Xinhua, June 11, 2015 Adjust font size:

Around 43 percent of global public investors believe the Asia Pacific region will yield the best returns over the next five years, followed by North America (23 percent), Europe (14 percent), Africa (13 percent) and Latin America (seven percent), according to a survey report released here Wednesday night by a London-based think tank.

TOP TEN

The second annual report, conducted by the Official Monetary and Financial Institutions Forum (OMFIF), analyzes 29.7 trillion U.S. dollars worth of investment held by 500 public sector institutions (GPI), which is led by central banks, public pension funds and sovereign funds, in 180 countries.

According to the findings, central banks' share of assets at the end of 2014 fell to 43.9 percent of the total from 45.2 percent a year earlier, while the shares of public pension funds and sovereign funds increased to 33.6 percent from 33.0 percent and 22.5 percent from 21.8 percent, respectively.

Currency pressures among energy exporters, and the effect of the strengthening U.S. dollar against non-dollar-denominated reserves, are attributed to the central banks' dwindling share, said OMFIF.

The top 10 global public investors have largely remained the same over the year, led by the People's Bank of China, the Japanese Ministry of Finance and Bank of Japan, Japan's Government Pension Investment Fund, and Norges Bank Investment Management.

Italy's Cassa Depositi e Prestiti replaced the Central Bank of Russia at number 10 on the list, after Russia depleted reserves last year to help put the brakes on the rouble's fall, noted the report.

PORTFOLIO CHANGES

Public sector asset managers have been moving aggressively into real estate and infrastructure to offset low returns on traditional markets, creating a rise of asset bubbles, the report said.

The think tank estimates that 9.1 percent of total assets (around 2.7 trillion U.S. dollars) held by the 500 GPIs are in real estate and infrastructure. When asked about future asset allocation, 44 percent of sovereign funds and public pension funds stated they would be increasing their real estate and infrastructure holdings in the next three to five years, a greater amount than for any other asset class.

The survey highlights expectations that asset price bubbles are now spreading from the capital market, as a result of central banks' quantitative easing policies, to the sectors of real estate and infrastructure.

With regard to public equity investments, merely four percent of respondents in the survey indicated they would be reducing allocations, the lowest fall of any asset class, with 27 percent increasing their share.

Total assets under management (including gold) of the 500 GPIs increased 520 billion U.S. dollars or 1.8 percent during 2014, a phenomenon primarily driven by public pension funds and sovereign funds increasing their asset base by 3.8 percent and 5.2 percent respectively, figures also showed. Endit