Comments on: Sovereign-Wealth Funds

By: dianafx

dianafx — Wed, 12 Mar 2008 04:44:48 +0000

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By: Ankur Aggarwal

Ankur Aggarwal — Fri, 29 Feb 2008 12:07:20 +0000

//well im not talkg about forex reserves//
well typically the forex dollars are diverted to these SWF and thats how these are funded. hence the size of Forex gives a good idea about the investment capacity of that state

//china is using their reserve as a weapon//
if by this you mean give loans to African Dictators, and Latin American Governments that are not in good book of USA, then I agree. China has effectively carved out a niche for itself by funding projects in such countries and effectively reduce the political leverage that USA can use because of the aid/loan schemes.

By: Prax

Prax — Fri, 29 Feb 2008 11:28:35 +0000

well im not talkg about forex reserves
china is using their reserve as a weapon

china had made secretive firms in last 5yrs which invested i us subprime

By: Ankur Aggarwal

Ankur Aggarwal — Fri, 29 Feb 2008 08:55:38 +0000

exactly …
take indian govt for example…
RBI needs to borrow at 7.99% in INR (an appreciating currency) and then buy dollars (a depreciating currency) and get a US treasury returns of <4%.
this lossy proposition tempts Indians and chineese govt to buy Mortgage CDO .. after all they also had AAA ratings….

now if these companies invest a part of the portfolio in stock market, the higher returns which it offers could compensate for some of the losses without encouraging these funds to go gamble in bond market trends

BTW Abu Dhabi Investment Authority has successfully managed a portfolio of >500 Billion dollars and funds like Kuwait Investment Authority have been formed in 1953 and both funds are delivering spectacular returns and were never had any underhand political agenda. so I guess govt not always do such a bad job

By: Prax

Prax — Fri, 29 Feb 2008 08:35:42 +0000

i was talkg in perspective of a citizen
did u know that china took a hit on its us sub prime pf ? did u know abt the public reaction?

By: Ankur Aggarwal

Ankur Aggarwal — Fri, 29 Feb 2008 08:22:06 +0000

did we ask for the same standards of accountability when US firms invest in India…. infact even for IMF/World bank help has several strings attached and they even try to modify our political scenario…
on the other hand these SWF don’t even ask for a seat in the board.

about UTI like scenario and competence… yes the citizens of the countries owning the SWF should be worried, but the companies and countries which are getting the money should be least bothered.

By: Prax

Prax — Fri, 29 Feb 2008 06:54:13 +0000

easier said though prudent
basic problem will be accountability and transparancy
and competence of the fund managers
we shouldn’t have a uti like situation