The global economic recovery and upturn in equity markets boosted central banks, sovereign fund and public pension fund assets by US $2.5 trillion in 2017 according to Global Public Investor (GPI), published annually by the Official Monetary and Financial Institutions Forum (OMFIF), the London- and Singapore-based think tank.
The US $2.5trillionn surge, representing a 7.3 per cent rise from 2016 to US $36.2trillionn, is the largest such increase in the five years since OMFIF began tracking the assets under management of the 750 institutions covered in GPI 2018.
GPI assets grew across all types and all continents, with one exception: there was a US $32 billionn decline in Middle East central bank holdings.
The largest percentage increase in assets was among European public investors, whose holdings rose by US $7.6 trillionn, 12 per cent higher than the previous year. Central banks led this performance. The Swiss National Bank added US $133 billion, bringing its total assets to US $812 billionn, 20 per cent higher than the year before. As with other investors, the SNB profited greatly from large gains in its foreign equity holdings.
Asia was the second-best performing region after Europe, as assets grew by US $950 billion. With US $13.7 trillion in holdings, it remains the world’s most important GPI hub and is home to the world’s three largest public investors: the People’s Bank of China, Japan’s Government Pension Investment Fund and the Bank of Japan.
Central banks around the world benefited from the rise in the price of gold, reflecting the precious metal’s significance in their reserves. They added more than 371 tonnes of gold during 2017, bringing total holdings to almost 31,800 tonnes, the highest level since the 1990s.
On currencies, 18 per cent of public investors surveyed by OMFIF intend to increase their exposure to renminbi over the next 12-24 months, and none plan to decrease. This is the highest response for all currencies, which illustrates the renminbi’s growth as a critical trade and investment currency.
Data shows that institutions are also adjusting their investment strategies to reflect their commitment to responsible ownership. They are increasingly investing in sustainable assets, with 36 per cent of public investors responding that they plan to increase their green bond investments over the next 12-24 months, with the equivalent figure at 18 per cent for green equities.
