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SOFAR to invest in gold, real estate and stocks

31 October 2011 14:51 (UTC +04:00)

After amendments in â€œRules on management, placement, saving of SOFAR currencyâ€, the means can be invested in other assets, including shares, real estate and gold.

The greatest innovation after amendments is the elimination of 95% of SOFARâ€™s funds in dollar, euro and pound sterling.

Besides, the list of countries that their currencies are available for placement of funds was changed. According to previous rules, the funds can be placed in currencies of G7 countries, European Currency Unityâ€™s countries, as well states having long-term country rating over A and A2 credit rating.

After amendments the funds can also be placed in RR and Turkish currency.

Serious amendments were made in placement of currency means. So that the Fundâ€™s means can also be invested in real estate and gold (in accordance to requirements applied by Association of London Precious Metals Market participants).

Note that, investing of Fundâ€™s means in gold, real estate, shares was prohibited in accordance to previous rules.

Addition of real estate to fundâ€™s investment directions is connected with recent sharp cheapening of real estate and existence of growth potential in the world, especially in Europe.

Remind that, some days ago president Ilham Aliyev publicized the initial plans on allocation of investments of Azerbaijan in European countries and said that a part of countryâ€™s currency reserves would be directed to real estate: â€œInvestment opportunities in EU space are being investigated and preliminary steps have already been taken. In order to diversify our financial resources, we should direct a part of our currency reserves to the real estateâ€.

According to changes, SOFAZ funds maybe invested to the shares including by internationally recognized stock market indices.

Moreover, if formerly the funds of Oil Fund were invested to securities and debt obligations issued by international financial institutions (World Bank, EBRD, ADB and etc), now these demands have been harden. According to new rules, the funds maybe invested to those obligations of international organizations, which have investment-grade credit rating.

So, according to changes, the money of the Oil Fund maybe invested to securities, having non-investment rating or deposits in institutions, provided that, total cost of this investment portfolio not to exceed 5%.

There is no doubt that this step is related to processes in world economy, decreasing of US credit rating, putting of large amount of dollars to market for elimination of US default danger, as well as weakening of dollarâ€™s position in financial system, facing of bankruptcy threat of some countries of eurozone and etc factors.