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Sovereign wealth funds – state investments during the financial crisis July 2009
Steffen Kern
Editorial note ► This presentation provides data and evidence as an update of previous Deutsche Bank Research publications on this topic, especially “SWFs and foreign investment policies – an update”, Deutsche Bank Research, Current Issues, October 22, 2008.
► The data provided in this presentation is valid as of June 5, 2009, unless specified otherwise. ► The
data provided in this presentation cannot be directly compared with evidence in previous publications by Deutsche Bank Research as changes have occurred in the external databases used for this analysis and data categorisation.
► Authoritative
or authorised information on asset sizes, asset allocation, funding, investment strategies and investment transactions of SWFs is still very scarce. The figures presented in this presentation have been collected from various publicly available sources and checked against public market information with the aim of maximising plausibility. Given the fragility of underlying data, all SWF-related figures and the calculations based upon them in this presentation should be considered as indicative and treated with due caution.
Steffen Kern | July 15, 2009 | Page 2
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 3
1 SWFs – a more than USD 3 trillion business… Major SWFs worldwide
Assets under management in USD bn, estimated values or ranges, latest data available
Norway NBIM USD 350bn
Abu Dhabi Investment Authority (ADIA), AE Various funds, SA Norges Bank Investment Management (NBIM), NO Government of Singapore Investment Corporation (GIC) (GIC), SG
Russia SFRF USD 190bn
Kuwait Investment Authority (KIA), KW Hong Kong Monetary Authority Investment Portfolio, HK
Temasek Holdings g Ltd.,, SG Reserve Fund, RU Libyan Arab Foreign Investment Company (LAFICO), LY National Wealth Fund, RU
Saudi Arabia Various USD 400bn
Investment Corporation of Dubai, AE Qatar Investment Authority, QIA, QA Australian Government Future Fund (AGFF), AU Fonds de Régulation des Recettes de l'Algérie, DZ
SWFs
Alaska Permanent Reserve Fund Corporation (APRF), US Brunei Investment Agency (BIA), BN Korea Investment Corporation (KIC), SK Kazakhstan National Fund (KNF), KZ National Pensions Reserve Fund (NPRF), IE Others, various countries
0 Source: DB Research Steffen Kern | July 15, 2009 | Page 4
China CIC USD 200bn
Kuwait KIA USD 169bn
China Investment Corporation, CIC, CN
150
300
450
600
750
900
Abu Dhabi ADIA USD 700bn Singapore GIC/Temasek GIC/T k USD 350bn
Hong Kong HKMA-IP USD 200bn
1 … that thus far p plays y a limited role in g global finance ► SWF assets under management
are estimated
to amount to more than USD 3 tr
► This
is an impressive figure, representing a multiple of the assets held a decade ago
SWF assets in comparison Asset classes by volume, USD tr and SWF assets as % of other asset classes, latest data available
comparison with other asset classes and financial market segments, segments the size of SWFs is still limited
Private debt securities
― Despite being more than twice the size of the
Stock market capitalisation
―…
SWF assets make up less than 1/2 of global foreign exchange reserves …
―…
less than 1/6 of g global p pension assets,, around 1/7 of global investment funds and insurance assets …
―…
less than 1/10 of global stock market capitalisation… it li ti
― … and only 3% of bank assets worldwide
Steffen Kern | July 15, 2009 | Page 5
54 41
HNWI assets
3% 5% 6% 7%
34
9%
30
P blic debt sec Public securities rities
10%
Investment f unds
22
14%
Insurance companies
21
14%
Pension f unds
19
16%
6
Reserves ex gold
47%
4
Public pension reserve f unds
70%
SWF
3
100%
Hedge f unds
1
226%
► This
aggregate comparison, however, cannot detract from their importance in individual – often high-profile – investment transactions
61
World GDP
► In
hedge fund business…
96
Bank assets
0 Source: DB Research
50
100
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 6
2 SWFs affected by y sudden erosion of revenues… Reserves growth losing steam Foreign exchange reserves excl. gold in SDR tr (left), and monthly rate of change in % (right) 5
4
3
4
Oil price decline Spot oil price, Brent, USD (left) and monthly change (right) Oil price, monthly % change (right) Oil price, monthly % change (right) Oil price price, USD (left)
160
30
140
20
120
10
2 100
3 1
0 80 -10
2 0 1
Reserves, monthly % change (right) Reserves, monthly % change (right) Reserves in SDR tr (left)
0 05
06
Source: DB Research
Steffen Kern | July 15, 2009 | Page 7
07
08
-20
40 -1 -2
04
60
20
-30
0
-40 97
99
Source: DB Research
01
03
05
07
2 … and decline of book value of investment p portfolios ► Revenue erosion ― Current
account surpluses of parent countries of major ajo S SWFss have a e narrowed a o ed as trade ade su surpluses p uses decline, …
―…
and dramatically diminished oil and other commodity prices reduce revenues from sales of natural t l resources …
Decline of SWF portfolio values Estimated values of assets for stylised portfolio distribution in USD tr 40 4,0
3.6
3,5
3.0 3,0
Equity
-45%
― ... leading to a visibly decelerated accumulation of foreign exchange reserves
► Decline of portfolio book value ― As
for other institutional investors, mark-to-market values of SWF portfolios likely to have suffered during financial crisis
― Typical
equity portfolios held by SWFs may have lost 45% between end-2007 and early 2009, reducing g overall SWF p portfolios by y around 18%
2,5 2,0 1,5
Bonds
― Overall,
such changes in portfolio values have – with very few exceptions – not been realised so far, with SWFs holding on to their investments
Steffen Kern | July 15, 2009 | Page 8
-18%
Bonds d
1,0 05 0,5
R l Real estate
Real estate
Liquidity
Liquidity
End-2007
Early 2009
― Additional
changes in portfolio values may result from price variations in other asset classes
Equity
0,0
Source: DB Research
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 9
3 Still,, growth g prospects p p in the long g run… ► Long-term
prospects for SWFs nevertheless positive, on the whole
are
― Past
performance of foreign exchange reserves – as a key indicator for liquidity that can be allocated to SWFs by parent governments – suggests that, in future, funds available for sovereign savings will continue to mount
► In
10 years, total assets under SWF management are likely to amount to USD 7 tr, more than twice the volume of today
► Given
the volatility in commodities and asset markets other scenarios are conceivable and markets, the development of asset volumes is subject to substantial uncertainties
SWF asset growth
Scenarios for the development of assets managed by SWFs, SWFs based on past foreign exchange reserves growth, USD tr, 2006-2019 12
10
Actual assets under management Main scenario CAGR (5Y), p=0.05 CAGR (10Y), p=0.15 CAGR (30Y), p=0.60 Zero growth, p=0.20 7 tr
8
6 3 tr
4
2
0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Source: DB Research
Steffen Kern | July 15, 2009 | Page 10
3 … depending p g on the future of trade and capital p flows ► Underlying SWF growth potential is contingent upon the future of globalisation
― Should
current account balances resume their recent trend of widening deficits in the US and strongly growing surpluses in the EMs EMs, then fundamentals for SWF development remain strong
Global imbalances Current account balances, USD bn 1,500
1,000
― If
significant reductions in current account balances occur,, i.e. especially p y trade activities remain subdued for a longer while, then SWF inflows are set to remain clearly below the levels seen in the recent past
► As A
a result, lt SWFs SWF particularly ti l l sensitive iti t to global macro risks
― Macroeconomic
risks: Exchange rate movements commodity price changes, movements, changes trade and capital flows
― Global
political risks: Potential protectionism in recipient countries, political climate between governments
OPEC & RU JP CN DE Asia US
500
0
-500
-1,000 2000 Source: DB Research
Steffen Kern | July 15, 2009 | Page 11
2002
2004
2006
2008
2010F
Agenda g 1
Industry y overview
2
Impact of economic crisis
3
Growth prospects
4
Investment trends 4.1
SWF investment transactions
42 4.2
Size and shares of SWF stakes
4.3
SWFs and the financial industry
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 12
4.1 SWF investments reflect fund inflows … and their decline ► For
1995 to 2009 YTD, publicly reported investment transactions by sovereign investment entities in publicly listed companies amount to USD 185 bn
Sovereign investments over time Completed investment transactions by statesponsored investment vehicles, USD bn
70
► 2004 to 2008 represent the heydays ― Strong
60
overall acceleration of global investments especially across EU, Asia and also US
58 50
― 2007
and d 2008 volumes l di driven b by investments in financial sector, especially in US, UK and CH
► First
evidence of activities in environment suggests sharp decline
― Investments
44 35
crisis
19
levels
― No more investments in financial sector funds have publicly announced a moratorium on overseas investments until further notice, including QIA, ADIA
Steffen Kern | July 15, 2009 | Page 13
30 20
well over 50% down from 2008
― Some
40
4 0 95
1
0 97
1
2 99
1
0 01
1
10
8
10 0
03
05
07
09YTD
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
4.1 Asia and Middle East are busiest investors ► As
homes to the largest SWFs worldwide, Asian and Middle Eastern economies are the origin of most SWF transactions
― 43% from Asia ― 29% from Middle East
Sovereign investments by domicile of investor
C Completed l t d iinvestment t t ttransactions ti by b statet t sponsored investment vehicles, by domicile of investor, USD bn and % of total, 1995 – 2009 YTD
― Only 18% from other economies Americas 8 4% EU 11 6%
Others 5 3%
Africa 2 1%
RU 0 0% Asia 79 43%
CN 26 14%
Middle East 53 29% The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 14
4.1 Asia and Europe p remain preferred p targets g for investments ► Asia
and the EU remain the preferred targets for SWF investments
― 31% to Asia ― 30% to EU economies
Sovereign investments by target region Completed investment transactions by statesponsored investment vehicles, by domicile of target, USD bn and % of total
― 20% to t US ► Shares reflect… ―…
prospect of strong long-term growth potential of Asian economies
― … balanced growth expectations for EU ―…
desire to currency-diversify y y out of USD,, into EUR
JP 3 2% Middle East 7 4%
Africa 2 1%
RU 0 0%
Others 22 12% Asia 58 31%
US 37 20% EU 57 30%
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 15
4.1 EU investments: UK on top p owing g to bank participations p p ► UK tops the league of EU recipient economies, largely reflecting strong inflows into UK’s financial sector
― UK 49% share in SWF EU investments ► Continental EU shows balanced distribution of SWF investments among largest economies
Sovereign investments in EU member states Completed investment transactions by state-sponsored investment vehicles in the EU, 1995 – 2009 YTD, by member state, USD bn and % of EU total 28 0 28,0
UK DE
8,2
15%
― DE 15%
FR
― FR 12%
NL
3,4
IT
2,5
4%
― NL 6%
DK 2,4
4%
― IT 4%
ES
1,1
2%
SE
1,0
2%
PT
1,0
2%
AT
0,8
1%
FI
0,5
1%
GR
0,5 ,
1%
MT
0,3
0%
BU
0,1
0%
SK
0,0
0%
6,6
0
49%
12% 6%
0
10
0
20
0 30
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 16
1
4.1 Global investments: Strong g bias towards financial targets g ► Sectoral
composition of SWF investments reflects huge investments in financial sector in 2007 and d 2008
― 42% of all SWF investments ► Investments
in manufacturing industries, services, real estate and commodities distributed fairly evenly
― 14% manufacturing industries ― 13% services ― 11% real estate ― 10% % commodities
Sovereign investments by target sector
Completed investment transactions by state-sponsored investment vehicles, 1995 – 2009 YTD, by target sector, USD bn and % of global total FinanceFinance
78 0 78,0
IndustryIndustry25,1
14%
Services Services23,9 23 9
13%
Real estate Real estate 21,2
11%
C Commodities Cditi Commodities diti17,9 17 9
10%
Technology Technology 16,6 Defence Defence 2,1 Others Others 0,3 0
42%
9% 1% 0%
020
0,140
0,260 0,3 80 0,4 1000,5
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 17
4.1 EU investments: More balanced sectoral distribution ► SWF
Sovereign investments in the EU by target sector
► Other industries more evenly distributed
Completed investment transactions by state-sponsored investment vehicles, 1995 – 2009 YTD, by target sector, USD bn and % of global total
investments in UK financial sector raise finance share to 41%
► Investments
in industries that are often cited as particularly relevant to public security and order play a negligible role in investment patterns
― Defence 4% ― Technology T h l 1%
Finance
8
23,0
Industry
710,3
18%
Services
8,7 6
Commodities
6,2 5
Real estate
5,6 4
Defence
2,1 3
Technology
0,7
2
Others
0,0
1
0 -0,15
41%
15% 11% 10% 4% 1% 0%
10 0,115
20 0,325
0,5
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 18
4.1 US investments: Heavy y bias towards finance visible ► Large
investments in US banking sector in 2007 dominate US inward SWF investments
― 59% finance ► Other
industries much less balanced than in
EU
― 18% real estate ― 10% technology ― 3% manufacturing industries
Sovereign investments in the US by target sector Completed investment transactions by state-sponsored investment vehicles, 1995 – 2009 YTD, by target sector, USD bn and % of global total Finance
8
Real estate
7 6,7
Technology
3,6
Industry
21,7 18%
6
10%
1,0 5
3%
Defence
0,8
4
2%
Services
0,5
3
1%
Commodities
0,5
2
1%
Others
0,0
1
0
-0,1
59%
0%
0,1 10
0,3 20
0,5
0,7 30
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 19
4.1 Asia investments: Balanced approach pp ► Investments
in Asia are very balanced by international and US standards
― Finance
makes up only 15% of total investments
► Industry is prime target in Asia ― 35% manufacturing industries ― 18% technology ― 17% commodities
Sovereign investments in Asia by target sector Completed investment transactions by state-sponsored investment vehicles, 1995 – 2009 YTD, by target sector, USD bn and % of global total Industry
8
Technology
7
10,4
Commodities
6
9,6
Finance
5
20,4
8,9
15% 9%
3 3,0
Services
2 0,3
Others
18% 17%
45,1
Real estate
35%
5%
1%
1 0% 0,0
Defence 0
0
0,1 10
0,2 20
0,3
0,4 30
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 20
Agenda g 1
Industry y overview
2
Impact of economic crisis
3
Growth prospects
4
Investment trends 4.1
SWF investment transactions
4.2
Size and shares of SWF stakes
4.3
SWFs and the financial industry
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 21
4.2 Global investments: Large-scale g investments dominate ► Publicly
Sovereign investments by size of individual transactions
► … with 68% of all deals valued at USD 1 bn or
C Completed l t d iinvestment t t ttransactions ti by b state-sponsored t t d investment vehicles, by size of transaction, USD m and % of total, 1995 – 2009 YTD
reported sovereign investments in companies tend to be large transactions…
higher
― 9% are USD 5 bn or higher ― 28% are between USD 2.5 bn and USD 5 bn ― 31% between USD 1 bn and USD 2.5 bn
>100 27.202 15%
► No
evidence exists on the size of undisclosed investments
>50 2.825 2%
<50 2.338 1%
>5,000 16.647 9%
― The
publicly reported transactions analysed here are likely to contain a significant bias towards large transactions
>2,500 52.602 28%
>500 26 277 26.277 14% Total share with investment volume > USD 1 bn:
― Undisclosed
transactions are probably of a significantly smaller size
68% >1,000 57.197 31% The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 22
4.2 Global investments: Controlling g stakes not uncommon ► Sovereign
investments in listed companies tend to lead to controlling stakes in the target entities
― 62%
of all deals lead to final stakes of 20% or higher
Sovereign investments by size of acquired stakes Completed investment transactions by state-sponsored investment vehicles, by size of stake acquired in individual enterprises per transaction, by number of transactions and % of total, 1995 – 2009 YTD
― 1/4 off allll deals d l lead l d to t 100% acquisitions i iti ► No
evidence exists on the size of undisclosed investments
― Norway’s
NBIM alone, for example, owning 0.77% of global equities, holds a total of 7,900 different securities by 2,200 issuers worldwide. Individual equity investments are limited to 10% stakes per company statutorily. The vast majority of NBIM’s equity investments are understood to be lower than 2% stakes. Only 195 companies worldwide have a stake higher than 2%. % Only O 4 have a stake higher than 5%. The largest NBIM shareholding is reported to amount to 8.7%.
5%-9% 72 16%
1%-4.99% 35 <1% 8% 3 1%
100% 113 25%
Total share leading to > 20% stake:
10%-19% 60 13%
62% 20%-49% 103 23%
80%-99% 13 3% 50%-79% 52 11%
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 23
Agenda g 1
Industry y overview
2
Impact of economic crisis
3
Growth prospects
4
Investment trends 4.1
SWF investment transactions
42 4.2
Size and shares of SWF stakes
4.3
SWFs and the financial industry
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 24
4.3 SWFs and g global financial industry y – massive investments… ► SWFs
have become an important and soughtafter source of capital for banks worldwide, especially i ll during d i the th financial fi i l crisis i i
― Total gross investments by SWFs and statesponsored investors since 1995 in the global banking industry amount to USD 113 bn
Sovereign investments in the financial industry over time Completed investment transactions by statesponsored investment vehicles in the financial sector globally, USD bn, 1995 – 2009 YTD 30 28
― Investments in the financial industry at large
25
amount to USD 137 bn (includes non-bank financial institutions)
― Publicly
reported individual amount to USD 78 bn
22
20
investments
15
► Beyond
the immediate importance of SWF capital contributions in recent months, the volume of SWF investments remains limited
14 10
― The
USD 113 bn of SWF investments in global banks make up 2.6% 2 6% of USD 4.3 4 3 tr of global stock market capitalisation of banks
5 0
0
0
0
0
1
0
0
1
4
4
3 0
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 25
4.3 … have led to high g stakes in prominent p institutions ►7
SWFs are large or single largest shareholders in the most prominent Wall Street banks and some important European banks
► Dubai
state-sponsored state sponsored investors are controlling shareholders in the global stock-exchange stock exchange landscape
Concentration of shareholdings g ― major j SWF interests in financial firms
9.9 NA 99 9.9 NA
Bank of China Barclays Bank China Construction Bank g p Citigroup ICICI Bank Ltd. Merrill Lynch Standard Chartered Bank Ltd. UBS
CN GB CN US IN US GB CH
15.5 3.1 5.1 11.1 9.6 9.9 20.0 9.0
Merrill Lynch
US
7.4
Barclays Bank Credit Suisse London Stock Exchange
GB CH GB
8.9 10.0 15.1
Qatar (QIA)
UAE, Dubai (DFG, DIFC, DIFX et al.)
US CN US US
Soutth Kore ea (KIC C)
Blackstone Group China Development Bank Morgan Stanley VISA Inc.
Funds
UAE, Abu habi Dh (ADIA A et al.)
Share (%)
K Kuwait (KIA)
Country
C China (C CIC)
Target
Singapore (GIC, Temasek)
Funds
Target
Country
Share (%)
Bombay Stock Exchange Deutsche Bank Euronext Hellenic Exchange HSBC Holdings Plc. ICICI Bank Ltd. London Stock Exchange Nasdaq OMX Group Och-Ziff Capital p Management g Group p Perella Weinberg Partners LC Standard Chartered Bank Ltd.
IN DE NL GR GB IN GB US US US GB
4.0 2.2 35 3.5 3.0 0.5 2.9 28.0 43.6 51.4 10.0 2.7
AP Alternative Asset LP Apollo Management Carlyle Group
US US US
40.0 40.0 7.5
Citigroup
US
4.9
Citigroup Merrill Lynch
US US
6.0 5.7
Note: Stakes by state-sponsored investors in financial firms worldwide at mid-June 08, country of domicile of investment target, % share in target. Largest investments only, no complete list. The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 26
4.3 Substantial imputed p losses – which have remained unrealised
► Subsequently,
share prices of the banks targeted g by y SWFs fell dramatically y
― Maximum imputed losses on the investments at times amounted to between 60% and 96% against the prices at which the shares had i iti ll been initially b acquired i d
► In
recent months, bank share prices have recovered, somewhat mitigating the imputed unrealised losses
― As
of June 5, 2009, imputed unrealised losses had narrowed somewhat to between 12% and 87%
0 -17
Deutsch he Bank
UBS
Morgan Stanley
-12
-20 -38 -40 -59
-60 60 -60
-100
-71
-78
-80
-87 -84
-82
-85
-84
-85
-96
-120 Current imputed loss (share price on June 5, 09 against price on day of purchase, in %) Highest imputed loss (lowest share price since acquisition of shares against price on day of purchase, in %) Source: DB Research
Steffen Kern | July 15, 2009 | Page 27
Citigrou up
a detailed analysis see “SWFs and foreign investment policies – an update”, Deutsche Bank Research, Research Current Issues, Issues October 22, 2008
Merrill L Lynch
― For
Imputed, unrealised losses on investments in individual banks since the acquisition of the respective stake, % Credit S Suisse
investments in the banking sector appeared economically reasonable
Unrealised losses on SWF investments in the banking g sector
Barclay ys
► At the point in time they were undertaken, SWF
4.3 Despite isolated asset sales, shareholdings expected to remain stable ► SWFs are likely to hold on to their shareholdings in major banks, as they will try to keep final realised losses at a minimum, and are in a more comfortable position to wait for improved market conditions than their private-sector counterparts ― So far, far sale of financial financial-sector sector assets by SWFs very limited, limited and mainly caused by isolated cases (e.g. (e g privatisation-related transactions in PRC ) ― Without privatisation transactions, total volume of financial-sector asset sales by SWFs amounts to USD 12 bn since 1995, i.e. 1/10th of banking-sector investments in that period
► Nevertheless, individual disinvestments can occur in order to restructure portfolios or create liquidity Major divestments by SWFs Date
1
Sta1 tus )
Target
Divestor
Aug 97 C
Burgan Bank SAK
KW
Kuwait Investment Authority
Jun 00 Jun 05 Jun 05 Feb 07 Feb 08 Mrz 08 Mrz 08 Mrz 08 Mai 08 Jun 08 Nov 08 Nov 08 Feb 09 Mrz 09 Apr 09 Jun 09
Arab African Investment Bank China Construction Bank Corp. China Construction Bank Corp. Vietnam Investment Fund Ltd. OMX AB Merrill Lynch & Co Inc. London Stock Exchange plc. Bank of Communications Co Ltd. China Construction Bank Corp. PT Lippo Bank Tbk. Lotus India Asset Management Co. China Construction Bank Corp. BTA Bank AK Bank of America Corp. Barclays plc. Barclays plc.
EG CN CN SG SE US UK CN CN ID IN CN KZ US UK UK
Kuwait Investment Authority Central Huijin j Investment Co Ltd. Central Huijin Investment Co Ltd. Abu Dhabi Investment Authority Qatar Investment Authority Temasek Holdings (Pte) Ltd. Qatar Investment Authority Central Huijin Investment Co Ltd. Central Huijin Investment Co Ltd. Khazanah Holdings Bhd Temasek Holdings (Pte) Ltd. Central Huijin Investment Co Ltd. Samruk Kazyna National Welfare Fund Temasek Holdings (Pte) Ltd. Qatar Investment Authority International Petroleum Investment Co.
C C C C C C C C C C C C D C C P
) C=Completed. D=Preliminary discussion. P=Pending.
KW
Transaction volume (USD m) 158
NA US SG SG AE KR UK CN US MY IN US RU US UK UK
NA 3,000 , 2,466 NA 491 50 664 NA 1,864 634 NA 7,058 2,634 1,467 102 5,641
Acquiror KW Kuwait Projects Co (Holding) KSCC KIPCO KW Market Purchase CN Bank of America Corp p CN Temasek Holdings (Pte) Ltd AE Keppel Corp Ltd QA Borse Dubai Ltd SG Hana Bank QA Market Purchase CN People's Republic of China CN Bank of America Corp MY Bumiputra-Commerce Holdings Bhd SG Religare Enterprises Ltd CN Bank of America Corp KZ Savings Bank of the Russian Federation SG Market Purchase QA Market Purchase AE Market Purchase
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored as the seller. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 28
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 29
5 Asset sales have risen in line with investments ► Disinvestments Di i t t
by b state-sponsored t t d investors have risen in line with massive increases in asset purchases
SWF asset sales over time Completed divestment transactions by state-sponsored investment vehicles globally, USD bn, 1995 – 2009 YTD
► However,
25
asset sales have amounted to merely USD 46 bn since 1995, and thus represent a fraction of investment volumes
20 19 15
11 6
5
10
5
4 0 0,4 0,2 0
0
0
0
0 0,1 0
0
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored as the seller. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 30
5 Foreign g non-state investors are p primary y buyers y ► Majority of SWF assets, if sold, get privatised ― Vast
majority of assets owned by statestate sponsored investors are sold on to private investors abroad
― 56%
of state-owned assets are sold on to foreign non-state investors
― 7%
of the assets are sold to domestic investors
SWF asset sale typology Asset sales by sovereign investors (SI) by type of transaction, USD bn and % of total, 1995 – 2009 YTD SI-to-nonSI, domestic 3 7%
Market purchases 9 22%
► Limited
circulation of assets among state investors
― Only
a total of 15% of assets sold by sovereign investors are purchased by other state entities
Total SI-tonon-SI:
63%
― At
7%, assets are passed on to sovereign investors in foreign jurisdictions only in exceptional cases
― 8%
are transferred to other state-sponsored investment vehicles domestically y
SI-to-nonSI, foreign 23 56%
Total SI-to-SI:
15%
SI-to-SI, crossborder 3 7%
SI-to-SI, domestic 3 8%
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored as the seller. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 31
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 32
6 Santiago g Principles: p SWFs have delivered ► SWFs have delivered a set of Generally Accepted SWF governance Principles and Practices for Sovereign Wealth Funds
SWF corporate objectives
Defining corporate objectives
% of respondents
Locus of objective-setting for SWF investment strategies, % of respondents 5
► Santiago Principles (GAPP) as non-binding code ― Commitment to financial, non-political objectives ― Transparency, a spa e cy, incl. c de details a s o on the e use o of voting o g
14
40
21
rights, risk management, use of financial leverage
65
― Governance,
organisational structures and processes, incl. commitment to separation of fund management and government
― Monitoring of GAPP by Standing Group of SWFs ► Policy issues going forward ― Adherence: Will SWFs apply the GAPP? Will the
55
Long-term savings, stabilisation Future pension liabilities Long-term returns
SWF board
Government
Other
Political involvement
Political accountability
Composition of governing bodies, % of respondents
Accountability to legislature, % of respondents 5
32
16 36
37
GAPP become a seal of quality for SWFs? Will this incentivise them to ensure compliance? 21
― Scope: Scope
Will parent governments go ernments apply appl similar quality standards to other forms of statesponsored investors, including pension funds, state-owned enterprises and other vehicles? Are there incentives for parent governments to channel politically controversial acquisitions through vehicles not subject to the GAPP?
Steffen Kern | July 15, 2009 | Page 33
32 Government officials with majority representation Government officials with minority representation Source: IWG
21 MoF reports to legislature CEO reports to legislature Not accountable to legislature Audit by legislature
6 Cross-border investments and p political momentum behind capital account liberalisation is weakening Foreign direct investment collapse in wake of crisis OECD FDI stocks and flows 2.500
14,0
FDI inward stock,, USD tr (right) ( g ) FDI outward stock, USD tr (right) FDI inward flows, USD bn (left) FDI outward flows, USD bn (left)
2.000
Global capital account openness Index for openness of capital accounts, based on KAOPEN/Chinn-Ito Index, maximum capital account openness = 100 100
12,0 90 10 0 10,0
80 70
1.500
8,0
6,0
1.000
Industrial economies Emerging a ets markets Less developed economies
60 50 40
4,0 500 2,0
30 20 10
0
00 0,0 00
01
02
03
04
Source: DB Research Steffen Kern | July 15, 2009 | Page 34
05
06
07
08
0 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Source: DB Research
6 Recipient p economies: Need to ensure open p markets ► Criteria
for optimal investment policies in recipient countries
― Open markets ― Symmetry in open market access ― Equal treatment of all foreign investors ― Proportionality of policy measures ― Transparency of policy rules ― Minimal political intervention ― International cooperation and standards ► OECD
multilateral initiatives markets at international level
― OECD
on
securing
OECD regulatory restrictiveness index (0=open, 1=closed), end-06 CN IN RU BR CH OECD NO
open
Guidance on Sovereign Wealth Funds, Oct
2008
― OECD Freedom of Investment Project ► National
FDI regulatory restrictiveness
investment policies have been refined in recent years, but no systematic protectionist revision of investment rules in response to financial and economic crisis so far
KR US CL JP FR IT UK DE 00 0.0 Source: OECD
Steffen Kern | July 15, 2009 | Page 35
02 0.2
03 0.3
05 0.5
6 Recent national p policies – no systematic y p protectionism United States ► 1988 Exon-Florio, Exon Florio CFIUS review ► 2007-2008 reforms (FINSA) ― ―
Extended range of relevant transactions Broadened definition of review criterion
― ―
Lower trigger value for CFIUS Increases in reporting requirements
► Implementing I l ti regulations l ti
Russia ► 2008 Law L on Foreign F i Investments I t t ― ―
―
National interest, implications for national security, economic development or government policies
► 2008 Principles for State Investors ― ― ― ―
Operational independence from government Commercial objectives Adequate, transparent supervision Impact on Australian business
Steffen Kern | July 15, 2009 | Page 36
in
► Additional general or sectoral rules
Australia ► 1975 Foreign Investment Review Board ► Broad criteria
Specification of 42 strategic sectors Threshold values for foreign shares Russian companies
Germany ► Revised Foreign Trade Act ► Establishment of review process ► Investments originating outside EFTA
― ― ―
EU or
Stake in listed or unlisted German company of more than 25% Criterion: Country’s security or public order No sectoral limitation
Steffen Kern Deutsche Bank Research Deutsche Bank AG Theodor-Heuss-Allee 70 DE–60486 Frankfurt am Main T E W
+49 69 910 31889 [email protected] www.dbresearch.com
© Copyright 2009. 2009 Deutsche Bank AG, AG DB Research Research, D-60262 D 60262 Frankfurt am Main, Main Germany Germany. All rights reserved reserved. When quoting please cite “Deutsche Deutsche Bank Research Research”. The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht. In the United Kingdom g this information is approved pp and/or communicated by y Deutsche Bank AG London,, a member of the London Stock Exchange g regulated g byy the Financial Services Authority for the conduct of investment business in the UK. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Limited, Tokyo Branch. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. Steffen Kern | July 15, 2009 | Page 37
Steffen Kern
Editorial note ► This presentation provides data and evidence as an update of previous Deutsche Bank Research publications on this topic, especially “SWFs and foreign investment policies – an update”, Deutsche Bank Research, Current Issues, October 22, 2008.
► The data provided in this presentation is valid as of June 5, 2009, unless specified otherwise. ► The
data provided in this presentation cannot be directly compared with evidence in previous publications by Deutsche Bank Research as changes have occurred in the external databases used for this analysis and data categorisation.
► Authoritative
or authorised information on asset sizes, asset allocation, funding, investment strategies and investment transactions of SWFs is still very scarce. The figures presented in this presentation have been collected from various publicly available sources and checked against public market information with the aim of maximising plausibility. Given the fragility of underlying data, all SWF-related figures and the calculations based upon them in this presentation should be considered as indicative and treated with due caution.
Steffen Kern | July 15, 2009 | Page 2
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 3
1 SWFs – a more than USD 3 trillion business… Major SWFs worldwide
Assets under management in USD bn, estimated values or ranges, latest data available
Norway NBIM USD 350bn
Abu Dhabi Investment Authority (ADIA), AE Various funds, SA Norges Bank Investment Management (NBIM), NO Government of Singapore Investment Corporation (GIC) (GIC), SG
Russia SFRF USD 190bn
Kuwait Investment Authority (KIA), KW Hong Kong Monetary Authority Investment Portfolio, HK
Temasek Holdings g Ltd.,, SG Reserve Fund, RU Libyan Arab Foreign Investment Company (LAFICO), LY National Wealth Fund, RU
Saudi Arabia Various USD 400bn
Investment Corporation of Dubai, AE Qatar Investment Authority, QIA, QA Australian Government Future Fund (AGFF), AU Fonds de Régulation des Recettes de l'Algérie, DZ
SWFs
Alaska Permanent Reserve Fund Corporation (APRF), US Brunei Investment Agency (BIA), BN Korea Investment Corporation (KIC), SK Kazakhstan National Fund (KNF), KZ National Pensions Reserve Fund (NPRF), IE Others, various countries
0 Source: DB Research Steffen Kern | July 15, 2009 | Page 4
China CIC USD 200bn
Kuwait KIA USD 169bn
China Investment Corporation, CIC, CN
150
300
450
600
750
900
Abu Dhabi ADIA USD 700bn Singapore GIC/Temasek GIC/T k USD 350bn
Hong Kong HKMA-IP USD 200bn
1 … that thus far p plays y a limited role in g global finance ► SWF assets under management
are estimated
to amount to more than USD 3 tr
► This
is an impressive figure, representing a multiple of the assets held a decade ago
SWF assets in comparison Asset classes by volume, USD tr and SWF assets as % of other asset classes, latest data available
comparison with other asset classes and financial market segments, segments the size of SWFs is still limited
Private debt securities
― Despite being more than twice the size of the
Stock market capitalisation
―…
SWF assets make up less than 1/2 of global foreign exchange reserves …
―…
less than 1/6 of g global p pension assets,, around 1/7 of global investment funds and insurance assets …
―…
less than 1/10 of global stock market capitalisation… it li ti
― … and only 3% of bank assets worldwide
Steffen Kern | July 15, 2009 | Page 5
54 41
HNWI assets
3% 5% 6% 7%
34
9%
30
P blic debt sec Public securities rities
10%
Investment f unds
22
14%
Insurance companies
21
14%
Pension f unds
19
16%
6
Reserves ex gold
47%
4
Public pension reserve f unds
70%
SWF
3
100%
Hedge f unds
1
226%
► This
aggregate comparison, however, cannot detract from their importance in individual – often high-profile – investment transactions
61
World GDP
► In
hedge fund business…
96
Bank assets
0 Source: DB Research
50
100
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 6
2 SWFs affected by y sudden erosion of revenues… Reserves growth losing steam Foreign exchange reserves excl. gold in SDR tr (left), and monthly rate of change in % (right) 5
4
3
4
Oil price decline Spot oil price, Brent, USD (left) and monthly change (right) Oil price, monthly % change (right) Oil price, monthly % change (right) Oil price price, USD (left)
160
30
140
20
120
10
2 100
3 1
0 80 -10
2 0 1
Reserves, monthly % change (right) Reserves, monthly % change (right) Reserves in SDR tr (left)
0 05
06
Source: DB Research
Steffen Kern | July 15, 2009 | Page 7
07
08
-20
40 -1 -2
04
60
20
-30
0
-40 97
99
Source: DB Research
01
03
05
07
2 … and decline of book value of investment p portfolios ► Revenue erosion ― Current
account surpluses of parent countries of major ajo S SWFss have a e narrowed a o ed as trade ade su surpluses p uses decline, …
―…
and dramatically diminished oil and other commodity prices reduce revenues from sales of natural t l resources …
Decline of SWF portfolio values Estimated values of assets for stylised portfolio distribution in USD tr 40 4,0
3.6
3,5
3.0 3,0
Equity
-45%
― ... leading to a visibly decelerated accumulation of foreign exchange reserves
► Decline of portfolio book value ― As
for other institutional investors, mark-to-market values of SWF portfolios likely to have suffered during financial crisis
― Typical
equity portfolios held by SWFs may have lost 45% between end-2007 and early 2009, reducing g overall SWF p portfolios by y around 18%
2,5 2,0 1,5
Bonds
― Overall,
such changes in portfolio values have – with very few exceptions – not been realised so far, with SWFs holding on to their investments
Steffen Kern | July 15, 2009 | Page 8
-18%
Bonds d
1,0 05 0,5
R l Real estate
Real estate
Liquidity
Liquidity
End-2007
Early 2009
― Additional
changes in portfolio values may result from price variations in other asset classes
Equity
0,0
Source: DB Research
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 9
3 Still,, growth g prospects p p in the long g run… ► Long-term
prospects for SWFs nevertheless positive, on the whole
are
― Past
performance of foreign exchange reserves – as a key indicator for liquidity that can be allocated to SWFs by parent governments – suggests that, in future, funds available for sovereign savings will continue to mount
► In
10 years, total assets under SWF management are likely to amount to USD 7 tr, more than twice the volume of today
► Given
the volatility in commodities and asset markets other scenarios are conceivable and markets, the development of asset volumes is subject to substantial uncertainties
SWF asset growth
Scenarios for the development of assets managed by SWFs, SWFs based on past foreign exchange reserves growth, USD tr, 2006-2019 12
10
Actual assets under management Main scenario CAGR (5Y), p=0.05 CAGR (10Y), p=0.15 CAGR (30Y), p=0.60 Zero growth, p=0.20 7 tr
8
6 3 tr
4
2
0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Source: DB Research
Steffen Kern | July 15, 2009 | Page 10
3 … depending p g on the future of trade and capital p flows ► Underlying SWF growth potential is contingent upon the future of globalisation
― Should
current account balances resume their recent trend of widening deficits in the US and strongly growing surpluses in the EMs EMs, then fundamentals for SWF development remain strong
Global imbalances Current account balances, USD bn 1,500
1,000
― If
significant reductions in current account balances occur,, i.e. especially p y trade activities remain subdued for a longer while, then SWF inflows are set to remain clearly below the levels seen in the recent past
► As A
a result, lt SWFs SWF particularly ti l l sensitive iti t to global macro risks
― Macroeconomic
risks: Exchange rate movements commodity price changes, movements, changes trade and capital flows
― Global
political risks: Potential protectionism in recipient countries, political climate between governments
OPEC & RU JP CN DE Asia US
500
0
-500
-1,000 2000 Source: DB Research
Steffen Kern | July 15, 2009 | Page 11
2002
2004
2006
2008
2010F
Agenda g 1
Industry y overview
2
Impact of economic crisis
3
Growth prospects
4
Investment trends 4.1
SWF investment transactions
42 4.2
Size and shares of SWF stakes
4.3
SWFs and the financial industry
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 12
4.1 SWF investments reflect fund inflows … and their decline ► For
1995 to 2009 YTD, publicly reported investment transactions by sovereign investment entities in publicly listed companies amount to USD 185 bn
Sovereign investments over time Completed investment transactions by statesponsored investment vehicles, USD bn
70
► 2004 to 2008 represent the heydays ― Strong
60
overall acceleration of global investments especially across EU, Asia and also US
58 50
― 2007
and d 2008 volumes l di driven b by investments in financial sector, especially in US, UK and CH
► First
evidence of activities in environment suggests sharp decline
― Investments
44 35
crisis
19
levels
― No more investments in financial sector funds have publicly announced a moratorium on overseas investments until further notice, including QIA, ADIA
Steffen Kern | July 15, 2009 | Page 13
30 20
well over 50% down from 2008
― Some
40
4 0 95
1
0 97
1
2 99
1
0 01
1
10
8
10 0
03
05
07
09YTD
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
4.1 Asia and Middle East are busiest investors ► As
homes to the largest SWFs worldwide, Asian and Middle Eastern economies are the origin of most SWF transactions
― 43% from Asia ― 29% from Middle East
Sovereign investments by domicile of investor
C Completed l t d iinvestment t t ttransactions ti by b statet t sponsored investment vehicles, by domicile of investor, USD bn and % of total, 1995 – 2009 YTD
― Only 18% from other economies Americas 8 4% EU 11 6%
Others 5 3%
Africa 2 1%
RU 0 0% Asia 79 43%
CN 26 14%
Middle East 53 29% The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 14
4.1 Asia and Europe p remain preferred p targets g for investments ► Asia
and the EU remain the preferred targets for SWF investments
― 31% to Asia ― 30% to EU economies
Sovereign investments by target region Completed investment transactions by statesponsored investment vehicles, by domicile of target, USD bn and % of total
― 20% to t US ► Shares reflect… ―…
prospect of strong long-term growth potential of Asian economies
― … balanced growth expectations for EU ―…
desire to currency-diversify y y out of USD,, into EUR
JP 3 2% Middle East 7 4%
Africa 2 1%
RU 0 0%
Others 22 12% Asia 58 31%
US 37 20% EU 57 30%
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 15
4.1 EU investments: UK on top p owing g to bank participations p p ► UK tops the league of EU recipient economies, largely reflecting strong inflows into UK’s financial sector
― UK 49% share in SWF EU investments ► Continental EU shows balanced distribution of SWF investments among largest economies
Sovereign investments in EU member states Completed investment transactions by state-sponsored investment vehicles in the EU, 1995 – 2009 YTD, by member state, USD bn and % of EU total 28 0 28,0
UK DE
8,2
15%
― DE 15%
FR
― FR 12%
NL
3,4
IT
2,5
4%
― NL 6%
DK 2,4
4%
― IT 4%
ES
1,1
2%
SE
1,0
2%
PT
1,0
2%
AT
0,8
1%
FI
0,5
1%
GR
0,5 ,
1%
MT
0,3
0%
BU
0,1
0%
SK
0,0
0%
6,6
0
49%
12% 6%
0
10
0
20
0 30
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 16
1
4.1 Global investments: Strong g bias towards financial targets g ► Sectoral
composition of SWF investments reflects huge investments in financial sector in 2007 and d 2008
― 42% of all SWF investments ► Investments
in manufacturing industries, services, real estate and commodities distributed fairly evenly
― 14% manufacturing industries ― 13% services ― 11% real estate ― 10% % commodities
Sovereign investments by target sector
Completed investment transactions by state-sponsored investment vehicles, 1995 – 2009 YTD, by target sector, USD bn and % of global total FinanceFinance
78 0 78,0
IndustryIndustry25,1
14%
Services Services23,9 23 9
13%
Real estate Real estate 21,2
11%
C Commodities Cditi Commodities diti17,9 17 9
10%
Technology Technology 16,6 Defence Defence 2,1 Others Others 0,3 0
42%
9% 1% 0%
020
0,140
0,260 0,3 80 0,4 1000,5
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 17
4.1 EU investments: More balanced sectoral distribution ► SWF
Sovereign investments in the EU by target sector
► Other industries more evenly distributed
Completed investment transactions by state-sponsored investment vehicles, 1995 – 2009 YTD, by target sector, USD bn and % of global total
investments in UK financial sector raise finance share to 41%
► Investments
in industries that are often cited as particularly relevant to public security and order play a negligible role in investment patterns
― Defence 4% ― Technology T h l 1%
Finance
8
23,0
Industry
710,3
18%
Services
8,7 6
Commodities
6,2 5
Real estate
5,6 4
Defence
2,1 3
Technology
0,7
2
Others
0,0
1
0 -0,15
41%
15% 11% 10% 4% 1% 0%
10 0,115
20 0,325
0,5
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 18
4.1 US investments: Heavy y bias towards finance visible ► Large
investments in US banking sector in 2007 dominate US inward SWF investments
― 59% finance ► Other
industries much less balanced than in
EU
― 18% real estate ― 10% technology ― 3% manufacturing industries
Sovereign investments in the US by target sector Completed investment transactions by state-sponsored investment vehicles, 1995 – 2009 YTD, by target sector, USD bn and % of global total Finance
8
Real estate
7 6,7
Technology
3,6
Industry
21,7 18%
6
10%
1,0 5
3%
Defence
0,8
4
2%
Services
0,5
3
1%
Commodities
0,5
2
1%
Others
0,0
1
0
-0,1
59%
0%
0,1 10
0,3 20
0,5
0,7 30
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 19
4.1 Asia investments: Balanced approach pp ► Investments
in Asia are very balanced by international and US standards
― Finance
makes up only 15% of total investments
► Industry is prime target in Asia ― 35% manufacturing industries ― 18% technology ― 17% commodities
Sovereign investments in Asia by target sector Completed investment transactions by state-sponsored investment vehicles, 1995 – 2009 YTD, by target sector, USD bn and % of global total Industry
8
Technology
7
10,4
Commodities
6
9,6
Finance
5
20,4
8,9
15% 9%
3 3,0
Services
2 0,3
Others
18% 17%
45,1
Real estate
35%
5%
1%
1 0% 0,0
Defence 0
0
0,1 10
0,2 20
0,3
0,4 30
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 20
Agenda g 1
Industry y overview
2
Impact of economic crisis
3
Growth prospects
4
Investment trends 4.1
SWF investment transactions
4.2
Size and shares of SWF stakes
4.3
SWFs and the financial industry
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 21
4.2 Global investments: Large-scale g investments dominate ► Publicly
Sovereign investments by size of individual transactions
► … with 68% of all deals valued at USD 1 bn or
C Completed l t d iinvestment t t ttransactions ti by b state-sponsored t t d investment vehicles, by size of transaction, USD m and % of total, 1995 – 2009 YTD
reported sovereign investments in companies tend to be large transactions…
higher
― 9% are USD 5 bn or higher ― 28% are between USD 2.5 bn and USD 5 bn ― 31% between USD 1 bn and USD 2.5 bn
>100 27.202 15%
► No
evidence exists on the size of undisclosed investments
>50 2.825 2%
<50 2.338 1%
>5,000 16.647 9%
― The
publicly reported transactions analysed here are likely to contain a significant bias towards large transactions
>2,500 52.602 28%
>500 26 277 26.277 14% Total share with investment volume > USD 1 bn:
― Undisclosed
transactions are probably of a significantly smaller size
68% >1,000 57.197 31% The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 22
4.2 Global investments: Controlling g stakes not uncommon ► Sovereign
investments in listed companies tend to lead to controlling stakes in the target entities
― 62%
of all deals lead to final stakes of 20% or higher
Sovereign investments by size of acquired stakes Completed investment transactions by state-sponsored investment vehicles, by size of stake acquired in individual enterprises per transaction, by number of transactions and % of total, 1995 – 2009 YTD
― 1/4 off allll deals d l lead l d to t 100% acquisitions i iti ► No
evidence exists on the size of undisclosed investments
― Norway’s
NBIM alone, for example, owning 0.77% of global equities, holds a total of 7,900 different securities by 2,200 issuers worldwide. Individual equity investments are limited to 10% stakes per company statutorily. The vast majority of NBIM’s equity investments are understood to be lower than 2% stakes. Only 195 companies worldwide have a stake higher than 2%. % Only O 4 have a stake higher than 5%. The largest NBIM shareholding is reported to amount to 8.7%.
5%-9% 72 16%
1%-4.99% 35 <1% 8% 3 1%
100% 113 25%
Total share leading to > 20% stake:
10%-19% 60 13%
62% 20%-49% 103 23%
80%-99% 13 3% 50%-79% 52 11%
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 23
Agenda g 1
Industry y overview
2
Impact of economic crisis
3
Growth prospects
4
Investment trends 4.1
SWF investment transactions
42 4.2
Size and shares of SWF stakes
4.3
SWFs and the financial industry
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 24
4.3 SWFs and g global financial industry y – massive investments… ► SWFs
have become an important and soughtafter source of capital for banks worldwide, especially i ll during d i the th financial fi i l crisis i i
― Total gross investments by SWFs and statesponsored investors since 1995 in the global banking industry amount to USD 113 bn
Sovereign investments in the financial industry over time Completed investment transactions by statesponsored investment vehicles in the financial sector globally, USD bn, 1995 – 2009 YTD 30 28
― Investments in the financial industry at large
25
amount to USD 137 bn (includes non-bank financial institutions)
― Publicly
reported individual amount to USD 78 bn
22
20
investments
15
► Beyond
the immediate importance of SWF capital contributions in recent months, the volume of SWF investments remains limited
14 10
― The
USD 113 bn of SWF investments in global banks make up 2.6% 2 6% of USD 4.3 4 3 tr of global stock market capitalisation of banks
5 0
0
0
0
0
1
0
0
1
4
4
3 0
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 25
4.3 … have led to high g stakes in prominent p institutions ►7
SWFs are large or single largest shareholders in the most prominent Wall Street banks and some important European banks
► Dubai
state-sponsored state sponsored investors are controlling shareholders in the global stock-exchange stock exchange landscape
Concentration of shareholdings g ― major j SWF interests in financial firms
9.9 NA 99 9.9 NA
Bank of China Barclays Bank China Construction Bank g p Citigroup ICICI Bank Ltd. Merrill Lynch Standard Chartered Bank Ltd. UBS
CN GB CN US IN US GB CH
15.5 3.1 5.1 11.1 9.6 9.9 20.0 9.0
Merrill Lynch
US
7.4
Barclays Bank Credit Suisse London Stock Exchange
GB CH GB
8.9 10.0 15.1
Qatar (QIA)
UAE, Dubai (DFG, DIFC, DIFX et al.)
US CN US US
Soutth Kore ea (KIC C)
Blackstone Group China Development Bank Morgan Stanley VISA Inc.
Funds
UAE, Abu habi Dh (ADIA A et al.)
Share (%)
K Kuwait (KIA)
Country
C China (C CIC)
Target
Singapore (GIC, Temasek)
Funds
Target
Country
Share (%)
Bombay Stock Exchange Deutsche Bank Euronext Hellenic Exchange HSBC Holdings Plc. ICICI Bank Ltd. London Stock Exchange Nasdaq OMX Group Och-Ziff Capital p Management g Group p Perella Weinberg Partners LC Standard Chartered Bank Ltd.
IN DE NL GR GB IN GB US US US GB
4.0 2.2 35 3.5 3.0 0.5 2.9 28.0 43.6 51.4 10.0 2.7
AP Alternative Asset LP Apollo Management Carlyle Group
US US US
40.0 40.0 7.5
Citigroup
US
4.9
Citigroup Merrill Lynch
US US
6.0 5.7
Note: Stakes by state-sponsored investors in financial firms worldwide at mid-June 08, country of domicile of investment target, % share in target. Largest investments only, no complete list. The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored investor on the acquirer side. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 26
4.3 Substantial imputed p losses – which have remained unrealised
► Subsequently,
share prices of the banks targeted g by y SWFs fell dramatically y
― Maximum imputed losses on the investments at times amounted to between 60% and 96% against the prices at which the shares had i iti ll been initially b acquired i d
► In
recent months, bank share prices have recovered, somewhat mitigating the imputed unrealised losses
― As
of June 5, 2009, imputed unrealised losses had narrowed somewhat to between 12% and 87%
0 -17
Deutsch he Bank
UBS
Morgan Stanley
-12
-20 -38 -40 -59
-60 60 -60
-100
-71
-78
-80
-87 -84
-82
-85
-84
-85
-96
-120 Current imputed loss (share price on June 5, 09 against price on day of purchase, in %) Highest imputed loss (lowest share price since acquisition of shares against price on day of purchase, in %) Source: DB Research
Steffen Kern | July 15, 2009 | Page 27
Citigrou up
a detailed analysis see “SWFs and foreign investment policies – an update”, Deutsche Bank Research, Research Current Issues, Issues October 22, 2008
Merrill L Lynch
― For
Imputed, unrealised losses on investments in individual banks since the acquisition of the respective stake, % Credit S Suisse
investments in the banking sector appeared economically reasonable
Unrealised losses on SWF investments in the banking g sector
Barclay ys
► At the point in time they were undertaken, SWF
4.3 Despite isolated asset sales, shareholdings expected to remain stable ► SWFs are likely to hold on to their shareholdings in major banks, as they will try to keep final realised losses at a minimum, and are in a more comfortable position to wait for improved market conditions than their private-sector counterparts ― So far, far sale of financial financial-sector sector assets by SWFs very limited, limited and mainly caused by isolated cases (e.g. (e g privatisation-related transactions in PRC ) ― Without privatisation transactions, total volume of financial-sector asset sales by SWFs amounts to USD 12 bn since 1995, i.e. 1/10th of banking-sector investments in that period
► Nevertheless, individual disinvestments can occur in order to restructure portfolios or create liquidity Major divestments by SWFs Date
1
Sta1 tus )
Target
Divestor
Aug 97 C
Burgan Bank SAK
KW
Kuwait Investment Authority
Jun 00 Jun 05 Jun 05 Feb 07 Feb 08 Mrz 08 Mrz 08 Mrz 08 Mai 08 Jun 08 Nov 08 Nov 08 Feb 09 Mrz 09 Apr 09 Jun 09
Arab African Investment Bank China Construction Bank Corp. China Construction Bank Corp. Vietnam Investment Fund Ltd. OMX AB Merrill Lynch & Co Inc. London Stock Exchange plc. Bank of Communications Co Ltd. China Construction Bank Corp. PT Lippo Bank Tbk. Lotus India Asset Management Co. China Construction Bank Corp. BTA Bank AK Bank of America Corp. Barclays plc. Barclays plc.
EG CN CN SG SE US UK CN CN ID IN CN KZ US UK UK
Kuwait Investment Authority Central Huijin j Investment Co Ltd. Central Huijin Investment Co Ltd. Abu Dhabi Investment Authority Qatar Investment Authority Temasek Holdings (Pte) Ltd. Qatar Investment Authority Central Huijin Investment Co Ltd. Central Huijin Investment Co Ltd. Khazanah Holdings Bhd Temasek Holdings (Pte) Ltd. Central Huijin Investment Co Ltd. Samruk Kazyna National Welfare Fund Temasek Holdings (Pte) Ltd. Qatar Investment Authority International Petroleum Investment Co.
C C C C C C C C C C C C D C C P
) C=Completed. D=Preliminary discussion. P=Pending.
KW
Transaction volume (USD m) 158
NA US SG SG AE KR UK CN US MY IN US RU US UK UK
NA 3,000 , 2,466 NA 491 50 664 NA 1,864 634 NA 7,058 2,634 1,467 102 5,641
Acquiror KW Kuwait Projects Co (Holding) KSCC KIPCO KW Market Purchase CN Bank of America Corp p CN Temasek Holdings (Pte) Ltd AE Keppel Corp Ltd QA Borse Dubai Ltd SG Hana Bank QA Market Purchase CN People's Republic of China CN Bank of America Corp MY Bumiputra-Commerce Holdings Bhd SG Religare Enterprises Ltd CN Bank of America Corp KZ Savings Bank of the Russian Federation SG Market Purchase QA Market Purchase AE Market Purchase
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored as the seller. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 28
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 29
5 Asset sales have risen in line with investments ► Disinvestments Di i t t
by b state-sponsored t t d investors have risen in line with massive increases in asset purchases
SWF asset sales over time Completed divestment transactions by state-sponsored investment vehicles globally, USD bn, 1995 – 2009 YTD
► However,
25
asset sales have amounted to merely USD 46 bn since 1995, and thus represent a fraction of investment volumes
20 19 15
11 6
5
10
5
4 0 0,4 0,2 0
0
0
0
0 0,1 0
0
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored as the seller. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 30
5 Foreign g non-state investors are p primary y buyers y ► Majority of SWF assets, if sold, get privatised ― Vast
majority of assets owned by statestate sponsored investors are sold on to private investors abroad
― 56%
of state-owned assets are sold on to foreign non-state investors
― 7%
of the assets are sold to domestic investors
SWF asset sale typology Asset sales by sovereign investors (SI) by type of transaction, USD bn and % of total, 1995 – 2009 YTD SI-to-nonSI, domestic 3 7%
Market purchases 9 22%
► Limited
circulation of assets among state investors
― Only
a total of 15% of assets sold by sovereign investors are purchased by other state entities
Total SI-tonon-SI:
63%
― At
7%, assets are passed on to sovereign investors in foreign jurisdictions only in exceptional cases
― 8%
are transferred to other state-sponsored investment vehicles domestically y
SI-to-nonSI, foreign 23 56%
Total SI-to-SI:
15%
SI-to-SI, crossborder 3 7%
SI-to-SI, domestic 3 8%
The data presented on this page are based on transactions between 1995 and June 2009 as reported by Dealogic involving at least one state-sponsored as the seller. The reported transactions are likely to entail only a fraction of the transactions de facto undertaken by such vehicles, many of which are not publicly disclosed. The data presented here should therefore be understood as tentative indicators of broad trends.
Steffen Kern | July 15, 2009 | Page 31
Agenda g 1
I d t overview Industry i
2
Impact of economic crisis
3
Growth prospects
4
Investment trends
5
SWF disinvestments
6
Policy issues
Steffen Kern | July 15, 2009 | Page 32
6 Santiago g Principles: p SWFs have delivered ► SWFs have delivered a set of Generally Accepted SWF governance Principles and Practices for Sovereign Wealth Funds
SWF corporate objectives
Defining corporate objectives
% of respondents
Locus of objective-setting for SWF investment strategies, % of respondents 5
► Santiago Principles (GAPP) as non-binding code ― Commitment to financial, non-political objectives ― Transparency, a spa e cy, incl. c de details a s o on the e use o of voting o g
14
40
21
rights, risk management, use of financial leverage
65
― Governance,
organisational structures and processes, incl. commitment to separation of fund management and government
― Monitoring of GAPP by Standing Group of SWFs ► Policy issues going forward ― Adherence: Will SWFs apply the GAPP? Will the
55
Long-term savings, stabilisation Future pension liabilities Long-term returns
SWF board
Government
Other
Political involvement
Political accountability
Composition of governing bodies, % of respondents
Accountability to legislature, % of respondents 5
32
16 36
37
GAPP become a seal of quality for SWFs? Will this incentivise them to ensure compliance? 21
― Scope: Scope
Will parent governments go ernments apply appl similar quality standards to other forms of statesponsored investors, including pension funds, state-owned enterprises and other vehicles? Are there incentives for parent governments to channel politically controversial acquisitions through vehicles not subject to the GAPP?
Steffen Kern | July 15, 2009 | Page 33
32 Government officials with majority representation Government officials with minority representation Source: IWG
21 MoF reports to legislature CEO reports to legislature Not accountable to legislature Audit by legislature
6 Cross-border investments and p political momentum behind capital account liberalisation is weakening Foreign direct investment collapse in wake of crisis OECD FDI stocks and flows 2.500
14,0
FDI inward stock,, USD tr (right) ( g ) FDI outward stock, USD tr (right) FDI inward flows, USD bn (left) FDI outward flows, USD bn (left)
2.000
Global capital account openness Index for openness of capital accounts, based on KAOPEN/Chinn-Ito Index, maximum capital account openness = 100 100
12,0 90 10 0 10,0
80 70
1.500
8,0
6,0
1.000
Industrial economies Emerging a ets markets Less developed economies
60 50 40
4,0 500 2,0
30 20 10
0
00 0,0 00
01
02
03
04
Source: DB Research Steffen Kern | July 15, 2009 | Page 34
05
06
07
08
0 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Source: DB Research
6 Recipient p economies: Need to ensure open p markets ► Criteria
for optimal investment policies in recipient countries
― Open markets ― Symmetry in open market access ― Equal treatment of all foreign investors ― Proportionality of policy measures ― Transparency of policy rules ― Minimal political intervention ― International cooperation and standards ► OECD
multilateral initiatives markets at international level
― OECD
on
securing
OECD regulatory restrictiveness index (0=open, 1=closed), end-06 CN IN RU BR CH OECD NO
open
Guidance on Sovereign Wealth Funds, Oct
2008
― OECD Freedom of Investment Project ► National
FDI regulatory restrictiveness
investment policies have been refined in recent years, but no systematic protectionist revision of investment rules in response to financial and economic crisis so far
KR US CL JP FR IT UK DE 00 0.0 Source: OECD
Steffen Kern | July 15, 2009 | Page 35
02 0.2
03 0.3
05 0.5
6 Recent national p policies – no systematic y p protectionism United States ► 1988 Exon-Florio, Exon Florio CFIUS review ► 2007-2008 reforms (FINSA) ― ―
Extended range of relevant transactions Broadened definition of review criterion
― ―
Lower trigger value for CFIUS Increases in reporting requirements
► Implementing I l ti regulations l ti
Russia ► 2008 Law L on Foreign F i Investments I t t ― ―
―
National interest, implications for national security, economic development or government policies
► 2008 Principles for State Investors ― ― ― ―
Operational independence from government Commercial objectives Adequate, transparent supervision Impact on Australian business
Steffen Kern | July 15, 2009 | Page 36
in
► Additional general or sectoral rules
Australia ► 1975 Foreign Investment Review Board ► Broad criteria
Specification of 42 strategic sectors Threshold values for foreign shares Russian companies
Germany ► Revised Foreign Trade Act ► Establishment of review process ► Investments originating outside EFTA
― ― ―
EU or
Stake in listed or unlisted German company of more than 25% Criterion: Country’s security or public order No sectoral limitation
Steffen Kern Deutsche Bank Research Deutsche Bank AG Theodor-Heuss-Allee 70 DE–60486 Frankfurt am Main T E W
+49 69 910 31889 [email protected] www.dbresearch.com
© Copyright 2009. 2009 Deutsche Bank AG, AG DB Research Research, D-60262 D 60262 Frankfurt am Main, Main Germany Germany. All rights reserved reserved. When quoting please cite “Deutsche Deutsche Bank Research Research”. The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht. In the United Kingdom g this information is approved pp and/or communicated by y Deutsche Bank AG London,, a member of the London Stock Exchange g regulated g byy the Financial Services Authority for the conduct of investment business in the UK. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Limited, Tokyo Branch. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. Steffen Kern | July 15, 2009 | Page 37
