State Oil Fund of Azerbaijan Prepares New Strategy on Placement of Assets
Azerbaijan, Baku, 4 June /corr. Trend I.Khalilova / From 2009 onwards, the State Oil Fund of Azerbaijan Republic (SOFAR) plans to expand its portfolio of shares, where the assets of the fund will be placed, Shahmar Movsumov, SOFAR Executive Director, said on 4 June. As a result of 2007, only 0.1% of the Fund's assets were placed in the shares.
"The funds of the SOFAR increases with high speed, and the monies envisaged to be retained for a long period are need to be placed in the long-term and risky assets bringing huge revenues," Movsumov said.
Currently the Fund is preparing suggestions for new strategic placement of the assets, which will be presented to be considered by the Supervisory Council in the near future. In its turn, the Council will direct it for the consideration of Country's President.
Movsumov did not say to what amount the portfolio of shares will be increased.
In 2007 SOFAR continued the policy of investing assets of the Fund into securities, and 96% of the assets fell on the funds allocated for a period of up to five years.
Today the period of placement is one of the important indicators. Currently such a tendency appeared in the developed countries (the USA, Japan and Anglia) that short-term investments bring more revenues than long-term investments. Due to it, since 2005, the Oil Fund has been placing its monies in short-term securities due to the complicated situation in the world markets.
Last year 24,82% was placed in the securities for a period of one year, 43.34% - from one to three years, 27.83% - from 3 to 5 years, 2.95% - from 5 to 7 years and 1.06 - from 7 to 10 years.
SOFAR pursues conservative policy in placing assets into securities. Mainly they are placed in securities with high ratings, served by international rating agencies such as Moody, Standard & Poor. At present, 48.13% assets have been placed in securities with rating "ААА" in version of S/P and Ааа - Moody`s, 30.82% - АА, АА+, АА- and Аа1, Аа2,Аа3 accordingly, 15.72% - А, А+, А- and А1, А2, А3, 3.26% - ВВВ, ВВВ+, ВВВ- and Ваа1, Ваа2, Ваа3, 2.07% - ВВ, ВВ+, ВВ- and Ва1, Ва2, Ва3. The Fund's assets can not be placed in the securities less than the investment rating.
A large part of funds (50.73%) have been placed in the USA, 41.06% in European countries, 4.85% - Asia and 3.36% in other countries.
The official exchange rate on 4 June is 0.8204 AZN/USD.
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