SOFAZ refuses investing in shares of foreign companies in 2010
Azerbaijan, Baku, September 16 /Trend, I.Khalilova/
Because of the uncertain situation in global financial markets, the State Oil Fund of Azerbaijan (SOFAR) has refused from investing its resources in highly profitable and risky financial instruments, particularly in shares in 2010, SOFAZ Executive Director Shahmar Movsumov told Trend.
"Today uncertain economic situation still covers the world, so we expect the improvement of the situation on world markets to diversify our investment portfolio," said Movsumov.
He said the assets of the Fund are projected at $21-22 billion by the end of this year. Currently, funds of SOFAZ exceed $19 billion.
The increase in Fund's assets and changes in investment policies will allow attracting new foreign managers to manage funds of SOFAR, Movsumov said earlier.
Earlier the World Bank offered Azerbaijan to reconsider its investment policy and invest into more risky financial instruments.
Such long-term investments for a period of 10-20 years has always justified themselves, as the return on them is higher than on bonds. In a short period of time the situation is usually resolved and the stock management revenues rise in a number of times. Before transition to such an investment policy, the country must be ready to any changes in stock prices.
So far SOFAZ had been pursuing a conservative investment policy, because a platform for management of funds was being formed during that period. However, it is high time to invest in more sophisticated financial instruments. They will give more revenues to the country.
SOFAZ announced its plans to expand the stock portfolio, but they have been postponed due to the global processes. This decision was correct, as evidenced by the fact that the crisis has had no impact on SOFAZ revenues, as stock prices fell by nearly 50 percent. Earlier Movsumov said perhaps, when the crisis slows down, SOFAZ will reconsider its investment policy before the end of 2009 or beginning of 2010 and will invest funds in securities of the companies which decreased their stock prices but are not close to bankruptcy.
As of results of 2009 only 0.04 percent of investment portfolio of the funs was placed in shares.
SOFAZ has been cooperating with the RAMP (Reserve Assets Management Programme) since 2007. The Fund transferred $100 million to the WB Treasury. The WB Treasury is managing $114 million, which has increased as a result of placement revenues.
RAMP has been operating for over 40 years.
SOFAZ managers are Clarident, a member of Credit Suisse, and Deutschebank Asset Management.
Sofaz assets hit $18.122.3 billion as of July 1, 2010 with an increase of 21.6 percent compared to the beginning of the year.
Official rate on Sept. 16 is 0.8035 AZN/USD.