Estimated size of Sovereign wealth funds
- UAE Abu Dhabi ADIA launched in 1976 $625bn
- Norway Government Pension Fund - Global launched 1990 $322bn
- Singapore GIC launched in 1981 $215bn
- Kuwait KIO launched in 1953 $213bn
- China Investment Corporation launched in 2007 $200bn
- Singapore Temasek launched in 1974 $108bn
- Qatar Qatar Investment Authority launched in 2005 $60bn
- US(Alaska) Permant Reserve Fund launched in 1976 $40.2bn
- Brunei Brunei Investment Authority launched in 1983 $30bn
Norway is currently the most transparent Sovereign Fund in the world. For further details on Sovereign Wealth Funds see Nordic Partnership report for potential for new sovereign wealth funds 2008.
The sovereign wealth funds are estimated to control more than $2 trillion in assets, more than hedge funds. And a lot of is coming out of jurisdictions that are raking in money from rising oil prices.
The problem is that this puts an enormous amount of power into the hands of a small number of people. And governments are not the same as shareholders, they have different agendas. Particularly if they represent autocratic regimes.
On the other hand, these sorts of investments help to stabilize markets. The Abu Dhabi Investment Authority's move on Citigroup is a case in point.
What's needed is more transparency. Getting the funds to release reports detailing their strategies and holdings would be a good start. But how that's worked out remains to be seen. Still, an answer is needed because this problem will not go away.
Kuwaiti fund eyes US subprime bargains
By Henny Sender in New York
Published: January 1 2008 22:03 | Last updated: January 1 2008 22:03
The Kuwait Investment Authority is following its peers in the Middle East in the hope of finding bargain investments in the US in the wake of the subprime mortgage crisis.
The $213bn sovereign wealth fund, unique in the Middle East because its inflows are governed by law and subject to parliamentary oversight, rather than the wishes of the ruling family, is particularly interested in opportunities in financial services.
“Perhaps we are at the eye of the storm now and are close to the peak of the problem,” Bader Al-Sa’ad, head of the KIA, told the Financial Times. “We don’t see prices dropping much more.”
Mr Al-Sa’ad said he intended to speed up decision-making at the KIA to take advantage of the opportunities thrown up by the crisis. “With Citi, the Abu Dhabi Investment Authority had good timing,” he said, noting that it took ADIA less than three weeks to seal its late November deal to invest $7.5bn in convertible securities in Citigroup. “I believe we need to move faster in some of our response time.”
In recent months, the KIA has been scouring Asia for investments, especially in banks, to capitalise on torrid economic growth in the region. The KIA has already made huge profits on its $700m stake in Industrial and Commercial Bank of China. But Asian banks are also expensive, trading in many cases at up to six times book value. By contrast, banks in Europe and the US, which have been hard-hit by the turmoil in the mortgage market, are trading at about book value, he said.
Like executives at other sovereign wealth funds, Mr Al-Sa’ad expressed dismay that off-balance sheet issues could surface in the US so soon after the shock of Enron’s implosion, following that company’s massive use of off-balance sheet vehicles to disguise the extent of its debts.
Mr Al-Sa’ad said sovereign wealth funds were long-term investors and far more stable than hedge funds because they do not use a lot of leverage. He took care to highlight the differences among sovereign wealth funds, noting that while some are increasingly competing with private equity firms, others, such as the KIA, seek to partner with them.
Japan to create £25bn sovereign fund to invest in markets hit by sub-prime
Posted January 25, 2008 at 07:27 PM
The Times reports that, “Japan is in advanced discussions to create its first sovereign wealth fund in a move aimed at mobilising one of the world’s biggest pools of foreign exchange reserves. The plans, described to The Times by the Minister for Financial Services and Administrative Reform, would give Japan membership of what is fast becoming a formidably powerful club of investors.”
Libya’s sovereign fund shuns US investments
- Published: 03 February 2008 11:23
