China’s central bank tops global public investor list

A woman walks past the headquarters of the People's Bank of China (PBOC), the central bank, in Beijing, June 21, 2013. REUTERS/Jason Lee/File Photo

LONDON: China’s central bank, the People’s Bank of China (PBOC), has remained the world’s biggest sovereign asset holder, with more than US$3.4 trillion (RM13.8 trillion) on its books, despite suffering a 12% slump in the value of its assets in 2015, a new report showed on Tuesday.

The annual report - compiled in its third year by the Official Monetary and Financial Institutions Forum (OMFIF) and to be released in full on Thursday - looks at asset management performance by public investors such as central banks, sovereign funds and public pension funds.

The highlights of the report showed that total assets under management of the 500 largest public investors fell by 2.9% or US$855bil (RM3.47bil) to US$28.99 trillion (RM117.55 trillion) in 2015.

The decline was driven primarily by central banks, which saw their assets shrink by 6.1% due to low oil prices, a fall in gold prices and rising capital outflows from emerging market economies.

Meanwhile public pension funds saw assets fall by 0.6%, while those of sovereign funds grew at 0.04% - their slowest pace in at least a decade, said OMFIF.

The list of the 10 biggest investors showed little change from the previous year, the report found, with Asian institutions continuing to dominate the ranking. Within the top 10, the biggest climb was by the China Investment Corporation, Beijing’s sovereign wealth fund, which rose to number five after its assets under management increased by 14.4%.

The move displaced the Saudi Arabian Monetary Agency (SAMA) - the kingdom’s central bank - which registered a more than 15% fall in its assets under management, the greatest loss in the top 10.

The report also found that central banks’ net gold purchases accelerated to the highest ever annual rate last year.

Low interest rates, which reduce the opportunity cost of holding non-yielding bullion, as well as an increased perception of country risk and rising geopolitical uncertainty all helped boost appetite for the metal.

Global central bank gold holdings rose 22% in value terms to US$1.36 trillion (RM5.5 trillion) in the year to the end of April, driven by further buying and a rise in gold prices of a similar magnitude.

Acquisitions in recent years have chiefly been driven by China and Russia, as well as Kazakhstan, with purchases by other central banks dwindling.

Gold is becoming more attractive as a freestanding asset not issued by any government or state, at a time when asset managers are querying whether yields are sufficient to cover country risk, the OMFIF report found. - Reuters