<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published April 13, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>SWFs seen to focus on home markets: report
By NEIL BEHRMANN
IN LONDON
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SOVEREIGN wealth funds, with assets estimated at US$3.2 trillion, will concentrate on home markets following sizeable investment losses in the past two years.
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</TD></TR><TR class=caption><TD></TD></TR></TBODY></TABLE>There will still be bargain hunting in the US and Europe, but the major sovereign wealth funds (SWFs) in the Middle East, China and the rest of Asia are likely to place their massive capital and income in local and regional quoted and private companies in the next few years.
This is the conclusion of Preqin, a London consulting firm that has published a study from a database of 55 SWFs.
The biggest SWF is the United Arab Emirates' Abu Dhabi Investment Authority with estimated assets of US$850 billion, followed by the Saudi Arabian General Investment Authority (US$431 billion), China's Safe Investment Company (US$311 billion) and Norway's state fund (US$305 billion).
Singapore's GIC with an estimated US$220 billion in assets, and Temasek with US$85 billion, are the sixth and the 10th largest, respectively (see table).
Unlike other institutional investors such as pension plans, sovereign wealth funds do not generally have future liabilities to pay out to pensioners. They also do not have external investors who decide to withdraw at short notice, notes Preqin. As a result, they have long-term investment horizons and are often relatively free to adopt more risky investment strategies.
There is growing pressure in the US and Europe for more transparency on the part of SWFs because those in China and the Middle East, in particular, are taking significant and strategic stakes in banks, energy, mining and other companies.
Equities, followed by fixed income investments, are by far the most popular investments of SWFs.
Almost three-quarters of SWFs have a sizeable proportion of their assets in property and 51 per cent in private equity.
Thirty-eight per cent, or 21 SWFs, have placed their money in hedge funds. For example, the Abu Dhabi Investment Authority holds as much as 5-10 per cent, or more than US$60 billion, in hedge funds and commodity trading, estimates Preqin.
It reports that Singapore's GIC had 3 per cent of its investments in hedge funds in 2008.
The global equity bear market and a decline in European currencies against their Asian counterparts have damaged the portfolios of SWFs.
They have thus been relieved by the sharp market recovery in recent weeks. Temasek, for example, has one of the largest portfolios among SWFs in financial stocks.
Its holdings of financial equities are widely geographically diversified, notes Preqin. Besides investments in Merrill Lynch/Bank of America, Barclays Bank and Bank of China, Temasek also has stakes in China Construction Bank, ICICI Bank of India and Standard Chartered Bank.
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>SWFs seen to focus on home markets: report
By NEIL BEHRMANN
IN LONDON
<TABLE class=storyLinks cellSpacing=4 cellPadding=1 width=136 align=right border=0><TBODY><TR class=font10><TD align=right width=20>
</TD><TD>Email this article</TD></TR><TR class=font10><TD align=right width=20>
</TD><TD>Print article </TD></TR><TR class=font10><TD align=right width=20>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>SOVEREIGN wealth funds, with assets estimated at US$3.2 trillion, will concentrate on home markets following sizeable investment losses in the past two years.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD></TD></TR></TBODY></TABLE>There will still be bargain hunting in the US and Europe, but the major sovereign wealth funds (SWFs) in the Middle East, China and the rest of Asia are likely to place their massive capital and income in local and regional quoted and private companies in the next few years.This is the conclusion of Preqin, a London consulting firm that has published a study from a database of 55 SWFs.
The biggest SWF is the United Arab Emirates' Abu Dhabi Investment Authority with estimated assets of US$850 billion, followed by the Saudi Arabian General Investment Authority (US$431 billion), China's Safe Investment Company (US$311 billion) and Norway's state fund (US$305 billion).
Singapore's GIC with an estimated US$220 billion in assets, and Temasek with US$85 billion, are the sixth and the 10th largest, respectively (see table).
Unlike other institutional investors such as pension plans, sovereign wealth funds do not generally have future liabilities to pay out to pensioners. They also do not have external investors who decide to withdraw at short notice, notes Preqin. As a result, they have long-term investment horizons and are often relatively free to adopt more risky investment strategies.
There is growing pressure in the US and Europe for more transparency on the part of SWFs because those in China and the Middle East, in particular, are taking significant and strategic stakes in banks, energy, mining and other companies.
Equities, followed by fixed income investments, are by far the most popular investments of SWFs.
Almost three-quarters of SWFs have a sizeable proportion of their assets in property and 51 per cent in private equity.
Thirty-eight per cent, or 21 SWFs, have placed their money in hedge funds. For example, the Abu Dhabi Investment Authority holds as much as 5-10 per cent, or more than US$60 billion, in hedge funds and commodity trading, estimates Preqin.
It reports that Singapore's GIC had 3 per cent of its investments in hedge funds in 2008.
The global equity bear market and a decline in European currencies against their Asian counterparts have damaged the portfolios of SWFs.
They have thus been relieved by the sharp market recovery in recent weeks. Temasek, for example, has one of the largest portfolios among SWFs in financial stocks.
Its holdings of financial equities are widely geographically diversified, notes Preqin. Besides investments in Merrill Lynch/Bank of America, Barclays Bank and Bank of China, Temasek also has stakes in China Construction Bank, ICICI Bank of India and Standard Chartered Bank.
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