Central banks around the world, including China’s, have shifted decisively into investing in equities as low interest rates have hit their revenues, according to a global study of 400 public sector institutions.
“A cluster of central banking investors has become major players on world equity markets,” according to a report to be published this week by the Official Monetary and Financial Institutions Forum, a central bank research and advisory group. The trend “could potentially contribute to overheated asset prices”, it warns.
Central banks are traditionally conservative and secretive managers of official reserves. Although scant details are available of their holdings, Omfif’s first “Global Public Investor” survey points out that they have lost revenues in recent years as a result of low interest rates – which they slashed amid the global financial crisis.