SOFAZ starts investing in Chinese Yuan
By Aynur Karimova
Azerbaijan's state oil fund SOFAZ, which is engaged in accumulation and management of oil and gas revenues, has started making investments in Chinese Yuan in order to further broaden and diversify its currency basket.
"The required license has already been obtained from the People’s Bank of China (PBC) for investments of up to RMB 3 billion and a contract has been signed with the PBC for the purchase and custody of Yuan denominated sovereign and agency bonds. As of July 1 2015, first investments in Chinese Yuan have been made," SOFAZ said on July 2.
The oil fund is also planning to gain exposure to Chinese equity markets. To this end, it has taken steps to obtain the “Qualified Foreign Institution Investors” license granted by the China Securities Regulatory Commission.
SOFAZ was established in 1999 with assets worth $271 million.
The main purposes of the fund are accumulation of funds and placement of assets abroad to minimize negative impacts on economy, prevention of the 'Dutch disease', ensuring savings for future generations, and maintaining the current social and economic standards in the country.
SOFAZ assets are placed partly in securities, money market instruments (deposits, bank accounts).
According to SOFAZ's investment strategy, up to five percent of the investment portfolio may be invested in stock, up to five percent in real estate and up to five percent in gold.
Funds in SOFAZ’s investment portfolio can be invested in securities that are denominated in currencies of G7 countries (U.S., Germany, Great Britain, France, Italy, Canada and Japan), European Monetary Union member countries, Russia and Turkey, as well as the countries with a long-term credit rating not less than “A” (Standard & Poors, Fitch) or “A2” (Moody’s).
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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova
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