PARIS – At the end of 2011, sovereign-wealth funds’ assets under management amounted to $3 trillion, following 237 direct investments worth $81 billion that year. Some experts even estimate SWFs’ assets to be worth $6 trillion. This means that SWFs, the avatars of state capitalism, are now twice as rich as the world’s hedge funds, the totems of liberal capitalism’s excesses.
The growing might of SWFs is causing concern – and, in some cases, inciting virulent criticism – particularly in host OECD countries, where many fear the redistribution of financial, economic, and political power to emerging countries that have very different political regimes from their own. In fact, of the seven SWFs that control more than two-thirds of all SWFs’ assets, three are from Asia (one from China and two from Singapore) and three are from the Middle East (Abu Dhabi, Kuwait, and Qatar).
European countries rank first among hosts for SWF investments, accounting for more than 40% of the total value of deals in 2011. The United States, where opposition to such investments has been stronger, accounts for less than 10%.
These countries’ concerns are not entirely unfounded. SWFs pose concrete risks, some of which have already materialized, to the global economy and to financial markets both at home and in host countries.