The world's sovereign wealth funds (SWFs) believe the present market conditions are discouraging for investment but expect their assets to grow despite the impact of the fiscal crisis.
The International Forum of Sovereign Wealth Funds (IFSWF), which was set up by the Santiago-based International Working Group of Sovereign Wealth Funds (IWG) in Kuwait last year, discussed the market situation at its second meeting in Sydney last week, the group said in a statement yesterday.
Its 23 members also reviewed capital flow with representatives of recipient countries and progress on the implementation of their famous Santiago Principles, which call for greater transparency and stronger management. "The forum felt that the current conditions in the financial markets and the uncertainties relating to sovereign credit risk assessment, especially in the euro zone, were presenting a less certain investment environment," it said.
"While not escaping the effects of the 2007-09 global economic and financial crisis, the forum members felt that they had proved their significance during this period. Many funds provided liquidity to stabilise rising fiscal deficits, as per their mandate, and some funds also supported stimulus packages to support economic activity. Going forward, the assets under management of the forum members are expected to continue growing at the same time as the global economic recovery takes place."
The statement said IFSWF members, including the Abu Dhabi Investment Authority (ADIA) and funds from Kuwait and Qatar, pledged to continue playing an "important role in keeping open the flow of investment when it could otherwise be falling in many recipient countries".
"This will be a significant factor in maintaining and contributing to global growth and stability by boosting productivity," it added. The statement said members also acknowledged the continuing importance and value of the Santiago Principles in strengthening their operations as" reliable and responsible sovereign investors." They noted continuing progress in the application of the Principles since their adoption in October 2008.
ADIA and several other SWFs issued the Santiago declaration following furore in the West over their investment activities, which are concentrated in the United States and other Western industrial powers.
SWFs said they play a major role in stabilising the global financial system
By Nadim Kawach
© Emirates Business 24/7 2010
