Size of sovereign wealth fund overstated?
That's what Christopher Balding figures. See the WSJ Economics Blog post about his forthcoming work. It's SFW.
Thanks to Marginal Revenue for the pointer.
Thanks to Marginal Revenue for the pointer.
Labels: sovereign wealth funds
posted by John B. Chilton at 4/02/2008 05:41:00 AM
2 Comments:
An increasing proportion of AD and Dubai funds would be collateralized instruments (mortages) for all that real estate along SZ Highway.
The SWFs then package those instruments, and sell them to investors --- perhaps a few from America that think the AED will adjust it's peg against the dollar - giving them income, as well as interest.
With cash-in-hand, the SWFs then buy up shares in big companies. The big are chosen for political, as well as strategic reasons.
Working at ADIA must be an extremely tough job. You need to figure out how to perpetuate and sustain the image.
Sir,
The article may be well researched, but it's not without its flaws. It goes against the grain of investment to have all your proverbial eggs in one basket (the basket being Europe and the US).
Further, with the issue of transparency being key, many institutions in the said basket don't prefer to give up stakes to these SWFs. So the $3trillion isn't the real question that has to be addressed: it's the willingness of the counter parties to accept those petrodollars.
The final issue comes with the operators of the fund disclosing their assets/potential assets. If they wish to work under secrecy, and it has served them well thus far, there's really no need for them to announce what they own. Estimating the size of these funds is about as easy a task as solving algebra by chewing gum.
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