- Yoshikami: Four Things You Need to Know About Gold Now
- Steinbock: The Euro Zone Endgame Begins
- Laouchez: Leadership in Financial Services — Missing in Action?
- Kuntz: Finding Opportunity in Emerging Markets
- Busch: How to Trade the Euro on an Outside Reversal
- Dunkelberg: The Real Banking Crisis - They're Too Big to Manage
- Greek Exit a Worse Mistake Than Adoption of Euro
- Tamminen: Waste Not, Want Not
- Morici: The Eclipse of American Banking
- Will This Decade Be More Grim Than the 1930s?
MOST SHARED
- JPMorgan Trading Loss: Did Regulators Miss the Risk?
- RIM May Cut at Least 2,000 Jobs in Restructuring: Report
- Marc Faber: 100% Chance of Global Recession
- How Nasdaq Lost Control of Facebook IPO, by the Minute
- Bacon Tourism: From the Davos of Bacon to Bacon Mecca
- Heard in More US States: See You in Tax Court!
- 5 Spots Where the Dollar Buys a Great Vacation
- What College Tuition Will Look Like in 18 Years
- A New Look at the ‘New Poor’
- Six Pack: Beer Buzz of the Week
- Greek Exit Could Trigger 50% Fall in Euro Stocks: Analyst
- Under Pressure, FHA Skews to Wealthier Home Buyers
- Big Stock Upside for Hudson City Deal: Analyst
- 5 High-Yield Stocks Ready to Boost Dividends
- Yoshikami: Four Things You Need to Know About Gold Now
- Steinbock: The Euro Zone Endgame Begins
- Option Bulls Take Another Shot on Idenix
- How Nasdaq Lost Control of Facebook IPO, by the Minute
- Week Ahead: Europe Has Wall Street Bull on Short Leash
- Pro-Bailout Greeks Regain Lead in Polls Before Vote
- Citigroup Lost $20 Million on Facebook IPO Trades
- JPMorgan to Shake Up Risk Team After Big Loss: Report
- RIM May Cut at Least 2,000 Jobs in Restructuring: Report
- EU Finalizes Bank Reforms; Shifts Burden to Bondholders
- Spain's Bankia Eyes Stake Sales After Record Bailout
- EU Set to Launch Action Against China Over Telecom Aid
RSS FEED
CNBC Guest Blog
Text Size 
Chandler: Future of SWFs Could Be in Their Own Backyard
Before the economic downturn, there had been concern that sovereign wealth funds would use their vast resources to pursue political rather than financial objectives. There were concerns about transparency and the revival of state capitalism. Based on linear projections, some observers warned that sovereign wealth funds grow bigger than central bank reserves themselves.
Now as the financial crisis unfolds, some of the anxiety over sovereign wealth funds has diminished. The collapse in the price of oil saps the growth of Middle East sovereign wealth funds.
The sharp slowdown in the global economy means that countries like China recycling its trade surplus in part into its sovereign wealth fund will also have less funds. In addition, given the performance of numerous asset class that sovereign wealth funds invested, included distressed banks, equities and emerging markets, like other investors the SWFs, must have experienced significant capital depreciation.
The financial crisis may prompt a new direction for sovereign wealth funds. Rather than look at the SWF as to help manage reserves, which means international diversification, it is possible that sovereign wealth funds begin looking at more local investments to support domestic markets. South Korea may point the way.
More on Sovereign Funds:
The government plans to revise legislation to allow its SWF, the Korea Investment Corp, to invest domestically. The legislation also envisions the fund to borrow and issue bonds. The fund has almost $25 billion, and by its 2005 charter was only permitted to invest overseas.
In contrast, Russia has earmarked about 10 percent of its Wellbeing Fund with about $61 billion into domestic bonds and stocks. Reports suggest it has already invested roughly half the funds already into domestic markets. Given the pressure on Russian markets, it would not be surprising to see it expedite the plans to invest domestically.
What other CNBC Contributors are Saying ...
______________________________________
Marc Chandler is the global head of currency strategy for Brown Brothers Harriman. He has been analyzing, writing and talking about the foreign exchange market for more than 20 years. He is a regular guest on CNBC and his essays have been published in numerous economic and business publications. He previously served as the chief currency strategist for HSBC Bank USA and Mellon Bank.
Data is a real-time snapshot *Data is delayed at least 15 minutes
