Dubai Expo 2020 recommends postponing a year amid virus    US expected to renew sanctions waivers allowing Iran nonproliferation work: Sources    How will we vote? Outbreak revives debate mail-in ballots    Poland vote could be postponed if safety not guaranteed: President    What you need to know about the Central Bank of Egypt's new cash deposits and daily withdrawal limits    Saudi, UAE businesses battle cash crunch despite anti-coronavirus stimulus    Tokyo Olympics rescheduled for July 23-Aug 2021: Organizing committee    Iran's coronavirus death toll reaches 2,757: Health official        Serie A hits back at Italy sports minister Spadafora over 'bubble' remark    Drop in China's new coronavirus cases; none in Wuhan for sixth day    Egypt's FRA launches policies for micro-finance activity amid coronavirus    Mourinho to take Tottenham training via video amid coronavirus lockdown    Egypt's defender Elmohamady proud of 10-year milestone in England    Facebook users add ‘Stay At Home' frame to profile photos    How coronavirus affects real estate market in Santa Clarita Valley    UK epidemic is slowing and antibody test could be ready in days, top epidemiologist says    Twitter removes 2 Bolsonaro tweets questioning coronavirus quarantine    Egypt to extend closing mosques over coronavirus fears – minister    El-Tayeb urges Egyptians to stick to coronavirus preventative measures    Egypt, MENA growth forecast at 2.7%, -0.3% respectively: IIF    Prosecution warns of EGP 300k fine or 2-year jail for spreading fake coronavirus news    Al-Sisi discusses joint coronavirus efforts with Abu Dhabi Crown Prince    Saudi Arabia intercepts missiles over Riyadh    CBE temporarily regulates cash deposits, withdrawals    Lagging COVID-19 response to shield frail economy: Rouhani    Apple works with US House to release coronavirus app, website    California's houisng market unclear after new restrictions amid coronavirus    Farwell to Egyptian comedian George Sidhom    Weekend's virtual concerts, plays, and festivals people can stream at home    Egyptian comedy icon George Sidhom dies at 81    Shooting Egypt's Ramadan television series in the time of coronavirus    Egyptian court sentences five to death for vandalising gas pipeline, killing nine    Amid coronavirus outbreak, Egyptian Premier League cancellation seems inevitable    Brazilian football stadiums transformed into hospitals to treat coronavirus patients    Stay At Home: Ministry of Culture to publish free books online for public browsing    ‘We are here to boost the morale': Ahmed Zeidan, Egypt's ROOM Art Space& Café    IOC postpones Tokyo Olympics due to coronavirus pandemic    Playing for time    Water effects of the dam    What to watch to kill time in quarantine?    Japan PM Abe agree on delaying the Tokyo Olympics for one year    Ethiopia has not sent Egypt latest designs for GERD: Minister of Irrigation    Al-Sisi appreciates Kenya's support to Egypt's stance on GERD    Nigerien President hails Egypt's diplomatic attempts to reach agreement over GERD    Tom Hanks and wife Rita Wilson announced both test positive for coronavirus    Cairo court acquits Mubarak's sons of stock market manipulation    Egypt's President Sisi pardons some prisoners on 25 Jan. Revolution anniversary    

Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.

Mideast bankers defend sovereign wealth funds
Published in Daily News Egypt on 20 - 05 - 2008

SHARM EL-SHEIKH: Mideast bankers on Monday staunchly defended sovereign wealth funds - the vast government-directed pools of investment money that have raised controversy in the West - contending they helped save the US financial system from collapse.
But World Bank President Robert Zoellick cautioned that the funds will continue to raise international concern as countries question whether their investments are driven by the search for profit or by political interests that could threaten national security.
The United States and the European Union have pushed sovereign funds to provide greater disclosure about their investment strategies and are backing an initiative by the International Monetary Fund and the Paris-based Organization for Economic Cooperation and Development to develop a voluntary set of best practices for the investment vehicles.
But many bankers and investment managers say the concerns are overblown and point out that the funds swooped in to provide much-needed capital to the US financial system when it was recently reeling from the mortgage crisis. They maintain the funds are passive investors with no political agenda.
There is no need to be alarmed, said former Pakistani Prime Minister and Citigroup Inc. executive Shaukat Aziz at the World Economic Forum on the Middle.
In fact, I should say we should give a vote of thanks to all the sovereign funds.who came in and saved the global financial system, added Aziz on the second day of the three-day summit held in Sharm El-Sheikh.
Sovereign funds from China, Singapore and the Middle East have invested more than $40 billion (?25.7 billion) in Citigroup Inc., Merrill Lynch & Co.
Inc., and Swiss bank UBS since late last year.
Analysts estimate that approximately 40 sovereign funds worldwide control about $2.5 trillion (?1.6 trillion) in assets, a total that could reach $12 trillion (?7.7 trillion) by 2015. Sovereign funds in the Mideast and Russia have surged in recent years from soaring oil prices, while China has benefited from a growing trade surplus with the rest of the world.
Cyrus Ardalan, vice-chairman of London-based Barclays Capital and Board member of the Dubai International Financial Center, said the size of sovereign wealth funds should be kept in perspective relative to other financial assets. He said the top 300 pension funds in the world have $10 trillion (?6.4 trillion) in assets, and US consumers have $45 trillion (?28.9 trillion).
Even if they (sovereign funds) were to grow by a factor of two to three times, they are modest in comparison to the total pool of assets managed by institutional investors, said Ardalan.
Many finance professionals say sovereign funds should be treated no differently than private pools of capital. Otherwise, countries risk losing out on a key source of investment.
I think yes, more disclosure is important, but I would say that even on this point I think we have to be cautious not to ask from the sovereign wealth funds something that we don t ask from other large institutional investors, said Ardalan.
But Zoellick pointed out that Western concerns about sovereign funds could not be dismissed given the history of governments using investment for political purposes.
I do think however we need to be fair in analyzing one of the reasons for the concern here is that the history of government allocation of capital has not been such a good one over time, said Zoellick. So people are legitimately asking ... what are the purposes, what are the return objectives?
Many Europeans have been wary of Russian energy investment in recent years in eastern Europe and the leverage over oil and gas supplies it gives the Russian government.
Ibrahim Dabdoub, head of the National Bank of Kuwait, said sovereign funds managed by US allies in the Middle East should not be analyzed in the same light as those run by much larger countries with more international influence.
And the problem that we have here is they bundle us with China and Russia, said Dabdoub. Most of these sovereign wealth funds are owned by countries that are so small.
The size of tiny oil-rich Gulf countries has not stopped the US government from worrying about the impact of their investments. Lawmakers effectively torpedoed an effort by an Emirati company to manage six of the largest ports in the US in 2006, contending the Bush administration and the agency responsible for reviewing security issues had not fully considered all of the security concerns that had been raised.
Earlier this year, officials from the Emirati capital of Abu Dhabi, home to the world s largest wealth fund, sent a letter to the Bush administration and other Western governments spelling out the principles that guide its investment procedures.
The White House later announced that it had reached agreements with both Abu Dhabi and Singapore that they would not use their sovereign wealth funds to further their political goals.
Zoellick said he disagreed with the Congressional response to the Dubai ports deal, but added that politicians in a democracy could not ignore public concerns about national security.
It may turn out that government ownership is fine, said Zoellick. But it could be a problem if you have a certain country that wants to buy a certain company to get the technology or something else.

Clic here to read the story from its source.