GROUP MEMBERS: Magdalena Fortuna Oleh Kostyrko Małgorzata Regulska International Financial Management by dr hab. Krzysztof Rybiński.

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GROUP MEMBERS: Magdalena Fortuna Oleh Kostyrko Małgorzata Regulska International Financial Management by dr hab. Krzysztof Rybiński

AGENDA INSTITUTIONAL INVESTOR – DEFINITIONS CASE STUDY: CHINESE SWFs CASE STUDY: BLACK WEDNESDAY 1992,

INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTORS BANKS SWFs INSURANCE COMPANIES PENSION FUNDS HEDGE FUNDS, MUTUAL FUNDS INSTITUTIONAL INVESTORS ARE ORGANIZATIONS WHICH POOL LARGE AMOUNTS OF MONEY AND INVEST THEM IN ASSETS.

SWFs A Sovereign Wealth Fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally.

CHINESE SWFs In 2007/2008 SWFs together with some Chinese financial institutions made investments Western banks and wealth management companies. $77.2 billion LARGE TRANSACTIONS INCLUDED: 1.Government of Singapore Investment Corp’s (GSIC) $ 9.7 billion investment in shares of UBS, Temasek Holdings. 2.$ 9.2 billion purchase of an 18% stake in Standard Chartered, 3.Investment of $ 7.5 billion by Abu Dhabi Investment Authority (ADIA) to purchase 4.9% of total stake of Citigroup, 4.$ 4.4 billion investment by Temasek in the equity of Merill Lynch 5.China Investment Corporation’s (CIC) $ 5 billion investment in the stocks of Morgan Stanley.

CHINESE SWFs Resource: High-profile purchase (by CIC’s) of stakes in U.S. Private-equity firm Blackstone Group LP 1.China accounts for 23 per cent of all foreign holdings of US Treasuries and is the largest single investor. 2.China’s foreign reserves increased by $141bn (£85bn, €95bn) in the third quarter to $2,273bn. 3.Since the financial crisis of the late 1990s, Asian authorities accumulated foreign reserves as a safeguard against the effects of extreme capital flows. 4.There has been much attention on how these reserves are invested and how changes in the reserves impact international exchange rates. 5.This become particularly important at a time when there was a speculation that the dollar's position as the global reserve currency could be threatened if some of the large pools of reserves re-base their portfolios away from dollar denominated assets.

BLACE WEDNESDAY, 1992 o Place: GB, time: September 1992 o Important macroeconomic pre-conditions: 1. Since 1990, GB - a member of ERM (limitations on currency fluctuations ± 6%, 1GBP= 2.95 DM per 1 GBP) 2. Bundesbank interest rate increase after eastern and western Germany union in 1989 and DM attractiveness among investors 3. Weak British economy level as a factor for currency instability o Soros’s actions: 1. Buying GBP without attracting too much attention 2. Selling vast amount of GBP and buying about bln.15 of DM (at price 2.818dm = 1gbp) 3. GBP supply and demand disparity, as a result new price on the market 4. G. Soros sells bln.15 of DM (at price 2.509DM = 1 GBP) and quits the trade with around bln1usd revenue.

Resource: Article by Brian Tran, 3 Jan 2008 BLACE WEDNESDAY, 1992