The people who run sovereign wealth funds are bound to be more than a little interested in what happens to the Libyan Investment Authority.
The LIA, Libya’s sovereign wealth fund worth up to $70 billion, has had its assets frozen across the developed world. The U.S., the European Union and other countries have taken various measures to ensure the Gadhafi family doesn’t get its hands on the money.
It was easy paint-by-numbers decision making. Libya is in the midst of a popular revolution against a tyrant. Said tyrant was unusually closely linked to what was in theory a national asset pool.
For all intents and purposes, the LIA was an unusually well funded family office. To have allowed the Gadhafi clan access to these funds would have been unseemly. And it might have antagonized the new rulers of Libya once Gadhafi senior was overthrown.
But with rebellions taking hold across the Middle East, those heading sovereign wealth funds in emerging countries run along less than democratic lines will be wondering to what extent they might suffer similar interventions.
Bahrain, the latest serious hotspot, has a sovereign wealth fund worth around $9 billion.
That though is peanuts compared with holdings across the rest of the region. The United Arab Emirates, Saudi Arabia, Kuwait and Qatar together have nearly $1.5 trillion in sovereign wealth funds.
Nor are sovereign wealth funds limited to oil producers. China’s various funds, including the Hong Kong Monetary Authority’s, comes in at around $1 trillion.
In all, sovereign wealth funds in oil producing and developing countries weigh in at around $3 trillion worth of assets.
To the extent that these funds are associated with established rulers, they’d also be at risk of having their assets frozen in the case of a rebellion.
Managers of these funds are likely to have their investment agendas tailored appropriately in future. That could well mean fewer developed-market assets in general and equities in particular. Less property in places like London and New York. More that’s liquid and untraceable. And, above all, more gold.
By Alen Mattich
Source: http://blogs.wsj.com
The LIA, Libya’s sovereign wealth fund worth up to $70 billion, has had its assets frozen across the developed world. The U.S., the European Union and other countries have taken various measures to ensure the Gadhafi family doesn’t get its hands on the money.
It was easy paint-by-numbers decision making. Libya is in the midst of a popular revolution against a tyrant. Said tyrant was unusually closely linked to what was in theory a national asset pool.
For all intents and purposes, the LIA was an unusually well funded family office. To have allowed the Gadhafi clan access to these funds would have been unseemly. And it might have antagonized the new rulers of Libya once Gadhafi senior was overthrown.
But with rebellions taking hold across the Middle East, those heading sovereign wealth funds in emerging countries run along less than democratic lines will be wondering to what extent they might suffer similar interventions.
Bahrain, the latest serious hotspot, has a sovereign wealth fund worth around $9 billion.
That though is peanuts compared with holdings across the rest of the region. The United Arab Emirates, Saudi Arabia, Kuwait and Qatar together have nearly $1.5 trillion in sovereign wealth funds.
Nor are sovereign wealth funds limited to oil producers. China’s various funds, including the Hong Kong Monetary Authority’s, comes in at around $1 trillion.
In all, sovereign wealth funds in oil producing and developing countries weigh in at around $3 trillion worth of assets.
To the extent that these funds are associated with established rulers, they’d also be at risk of having their assets frozen in the case of a rebellion.
Managers of these funds are likely to have their investment agendas tailored appropriately in future. That could well mean fewer developed-market assets in general and equities in particular. Less property in places like London and New York. More that’s liquid and untraceable. And, above all, more gold.
By Alen Mattich
Source: http://blogs.wsj.com
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