Tags

, , ,

This Candidate is by far the most destructive in so far that it concerns you and I and not just Profit for Profit sake.

We could call it : The resource curse.

Sovereign Wealth Funds (SWF) are the most courted investors in the world.

In a way, an SWF can be a fund for future generations, aiming to create a wealth reserve for a future time where commodity revenues dwindle, either because reserves run out, or prices go down.

Owned or controlled by States, albeit separate from central banks, Sovereign Wealth Funds (SWFs) draw their revenue from either natural resources or from trade surpluses.

With the massive accumulation of foreign reserves, these institutions have moved away from a passive approach to asset management to a more long-term proactive investment strategy, embodying a form of State capitalism.

They have become absolutely massive in size in the not-too distant future will have powerful implications for the financial markets.

As I have discussed in the past, I am increasingly concerned about Capitalist financial globalization and the Inequality it is creating in the World.  (See previous posts)

You need look no further to explain the present problems in the World.  The Gap between the Haves and Have not’s. 

My calculations show that the total size of the SWFs will reach US$12 trillion by the end of 2015, and surpass the size of the world’s total official reserves within five years.

With the drop in Oil revenues the SWFs of tomorrow of Oil rich countries are likely to be more interested in strategic companies that possess higher-tech capabilities or techniques.  Higher-tech companies and even foreign banks will be primary targets of these funds.

By privatizing the limited resources that are left in the world they are turning us all in to commodities.

As the world economy slows their investments into emerging markets remain all but unnoticed to the Joe public.

They are now investing a wide range of investment objectives, along with continually evolving time horizons and risk appetites.  Some SWFs have become increasingly active in corporate acquisitions and other strategic transactions. Though many of these funds prefer to invest in debt or non-controlling equity positions, a small but growing number are seeking substantial minority and controlling equity stakes.

ADIA, Abu Dhabi’s sovereign-wealth fund, with assets of $773 billion, now employs 1,500 people. South Korea’s National Pension Service ($430 billion) will boost its investment team by 60 people this year. Canada’s Pension Plan Investment Board recently opened a fourth international office, in São Paulo, to enhance its ability to source and manage complex, sizable investment opportunities.

We should be urging Government policymakers in countries where companies have been targeted for investment to balance the perceived threats of SWFs against their potential benefits, particularly their ability to provide a stabilizing source of global liquidity in the current economic environment.

There rising prominence and lack of transparency of SWFs should be raising concerns among governments and other market participants. For this reason, companies intent on obtaining funding from or investing with SWFs should be scrutinized particularly if a transaction is perceived to involve a country’s strategic or security interests.

Recently they have become major participants in the financial institutions and alternative investment industries, with several high-profile investments in well-known private equity firms and financial services companies.

The next step is to ally with other like-minded investors.

Here are a few examples of what is going on.  

Sovereign wealth funds are flying under the radar again.

Seven of the 10 largest sovereign wealth funds are administered by authoritarian nations (China, Singapore and Saudi Arabia)

Not to mention those controlled by nations that give American strategists pause, including Russia, Kazakhstan, Libya, Iran, Azerbaijan, Venezuela and Turkmenistan.

Or the competing funds within its own very backyard

Alaska ($51.7 billion), Texas ($37.7 billion), New Mexico ($19.8 billion), Texas, again ($17.2 billion), Wyoming ($5.6 billion), Alabama ($2.5 billion), North Dakota ($2.2 billion) and Louisiana ($1.1 billion).

Nearer Home they are barely mentioned by Economic goo-roues or referred to by cash strapped Governments that are selling off their people’s countries assets.

Qatar Gaining Power in UK Through Financial Back Door.

Privatization is an emerging theme in the government’s plans for the public sector. The chancellor’s recent budget speech championed the sale of key public assets and relied heavily on foreign investment as a spur for growth.

David Cameron will clear the way for a multi billion-pound semi-privatisation of trunk roads and motorways as he announces plans to allow sovereign wealth funds from countries such as China to lease roads in England.

A Canadian pension fund, a British one and Kuwait’s sovereign-wealth fund last year bid (unsuccessfully) for Severn Trent, Britain’s second-largest publicly traded water company.

A Singaporean sovereign-wealth fund recently bought a significant share in RAC, a British car-breakdown service, outbidding private-equity firms such as Blackstone, CVC and Charterhouse.

Two of London’s most famous streets are now part-owned by Norway’s sovereign wealth fund after it paid £343m to snap up a share in an estate covering four acres of the capital’s West End.

The gallery-studded Cork Street are part of the Pollen Estate in which Norges Bank Investment Management (NBIM) has bought a 57.8% stake.

The investment arm of the Qatari armed forces has bought the five-star Renaissance hotel in central Barcelona for €78.5m (£65m) Sovereign wealth funds put an extraordinary Eu 40 billion of investment into Spain between 2009 and 2014.

Britain’s £8.6bn crown estate should be turned into a sovereign wealth fund to rival government-backed investment funds that have sprung up across Europe, the Middle East and Asia in the last 20 years.

Opposition to Europe‘s austerity programmes intensified on Friday as a top official at China’s £300 bn sovereign wealth fund warned that the public are at “breaking point”David Simonds, London property sell off, 1 July, 2012

Heathrow is now part-owned by the Chinese state after the country’s sovereign wealth fund acquired a 10% stake in the UK’s largest airport.The deal means Heathrow will be more than 40% controlled by the Chinese, Qatari and Singaporean governments,

The £2bn Shard, all 1,016 feet of it, will be illuminated to show off the Qataris’ latest trophy in the capital. Already in their shopping basket are Canary Wharf, Harrods and One Hyde Park, the world’s most expensive block of flats.

Gulf state of Qatar has added Shell to its growing roster of western investments by buying a holding in the company.

DUBAI—Qatar has replaced the head of its $300 billion sovereign-wealth fund with a member of the wealthy Gulf State’s royal family. Sheikh Abdullah bin Mohamed bin Saud Al-Thani will take the reins.

There is no reason that we the people should not include them in our United Nations Resolution to place a 0.05% World Aid Commission on all acquisitions they make in the world.

Like Electronic Foreign Exchange Trading and High Frequency Trading, Sovereign Wealth Funds contribute nothing to Society other than providing funds to make more profit.

If we are to have a world which is worth living out our lives in we must use Greed to provide a level playing field.

 

Advertisements