Wealth funds and central banks are shifting gears to navigate an unpredictable world

Times have changed, and the market is adapting. Sovereign wealth funds and central banks are altering their approaches in a bid to navigate the volatile global environment, Reuters reported, citing a survey by US-based global investment firm Invesco.

Investors are getting worried: The survey — taking place between January and March before Trump’s “Liberation Day” announcements — still showed a surge in concerns regarding market volatility and increased protectionism. Further down the road, climate change and higher levels of sovereign debt add to investors’ worries over the next 10 years.

Active management is the new trend: Funds managing over USD 100 bn in assets are increasingly moving to active management of their portfolios to weather the storm. While passive management — following weighted indices and portfolios — is traditionally more preferred as it seems to deliver better results, it needs predictable market conditions, which is “no longer the case,” Invesco’s head of official institutions Rod Ringrow told the newswire.

China is grabbing attention too: About 60% of wealth funds are planning to invest in Chinese assets, especially the tech market, in the next five years, with the “strategic urgency they once directed toward Silicon Valley,” according to the survey.

Alternative sources of income include private credit, with half of the funds actively increasing their allocations. Stablecoins — crypto pegged to USD and other currencies — are also seeing growing interest, especially among funds in emerging markets.

ALSO- Two thirds of the 58 central banks surveyed said they want larger, more diversified reserves to prepare for what is to come. Over 70% expressed concerns over US debt levels negatively affecting the USD over the long term.

BUT- Don’t expect the USD to weaken anytime soon. Some 78% expect the USD to maintain its strength for at least two more decades, until a credible alternative can rise to butt heads with the world’s reserve currency.

ALSO FROM PLANET FINANCE-

• BTC climbed to an all-time high beyond the USD 120k threshold yesterday amid growing investor sentiment and favorable market conditions. The cryptocurrency has gained over 29% YTD. (Reuters)
• Investment banking at major US banks could be in for its 14th consecutive quarterly underperformance in 2Q 2025, with revenues projected to fall nearly 10% y-o-y to USD 7.5 bn — less than a quarter of total revenues — for JP Morgan Chase, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley. (Financial Times)

MARKETS THIS MORNING-

Asian markets are mostly in the green this morning, while investors wait for insights on China’s economy. Hong Kong’s Hang Seng is up 0.8%, while Shanghai Composite is down 0.5%. Wall Street investors are also waiting for big banks’ earnings and inflation data, keeping futures virtually unchanged.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.4% yesterday on turnover of SAR 4.5 bn. The index is down 6.8% YTD.

In the green: Alistithmar Reit (+9.9%), SIIG (+4.6%) and Shaker (+4.5%).

In the red: Emaar EC (-4.1%), Naseej (-4.0%) and MBC Group (-3.8%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.3% yesterday on turnover of SAR 25.6 mn. The index is down 13.1% YTD.

In the green: Miral (+7.8%), AME (+5.5%) and Jana (+5.5%).

In the red: Mayar (-9.2%), Future Care (-7.4%) and Alhasoob (-6.1%).

CORPORATE ACTIONS-

#1- Seera Group Holding tapped SNB Capital as the financial advisor for its capital reduction, it said in a disclosure to Tadawul. The travel giant has yet to secure the Capital Market Authority’s approval.

REMEMBER- Last month, Seera’s board recommended an 8.7% capital reduction to SAR 2.7 bn through the cancellation of around 26k shares, citing a relative capital excess to the company’s needs.

#2- Al Tharwah Al Bashariyyah’s board recommended a 10% share capital increase to SAR 25.9 mn, which will be carried out by tapping the company’s share premium balance, it said in a disclosure to Tadawul yesterday. The plan will see the company increase the number of its shares to around 5.2 mn, which will be used in exchange for acquiring shares, stakes, or assets and allocated under the employee stock program.

#3- Al Baha Investment and Development Company is now called Saudi DrabInvestment Company, after its general assembly approved the rebranding, it said in a disclosure to Tadawul yesterday. The company is now registered on Tadawul’s website as Saudi Darb.

#4- Yanbu Cement Company’s board approved distributing SAR 78.75 mn in cash dividends for 1H 2025 at SAR 0.5 per share, according to a disclosure to Tadawul. The payout will be made on 28 August.