Baku. 31 October. REPORT.AZ/ The State Oil Fund of Azerbaijan, better known as SOFAZ aims to soon lift its cap on investment in stocks, including private equity, from 15% to 25%,
Report informs referring to Nikkei Asian Review, Deputy CEO Israfil Mammadov recently told weekly financial newspaper The Nikkei Veritas. According to him Sofaz plans to increase the share of its portfolio devoted to real estate to 10% from the current 5.5%.
Sofaz's assets swelled 24-fold in dollar terms in the decade since 2006, though the pace has slackened since 2012 and assets declined last year. With historically low interest rates squeezing returns and the slump in crude oil prices eating into revenue, the fund is being forced to add more risky assets to its portfolio.
Analytical group of Report by analyzing current state of global stock markets and global economic prospects believes it is not a good time to invest in risky securities, in particular, to increase investments in shares: In recent years, price indices of stock exchanges in the world has increased rapidly and reached its maximum limits. The reason for this is the monetary expansion in developed countries to revive their economies.
In addition, those countries by reducing discount rate to the minimum level even to the negative ensured financial resources to flow to the real economy. However, as we have seen, these funds flew not the real economy, but to the stock markets. In other words, without economic growth, and profit announcement by companies stock market rose unreasonably".
"In the near future economic growth in developed countries will stabilize and thus the interest rate of monetary expansion is projected to stop. However, stock market seems not to be increased in 1-3 years.
Because, the stock market is close to "bubble" level and later it is expected to turn to the bond market where interest rates are increasing.
Analytical group of Report believes against this background, stock market indices are likely to be reduced by 10-15%.