Thursday, February 28, 2008

US, Singapore & Abu Dhabi in talks on Sovereign Wealth funds(SWF)

US officials met executive representatives from Abu Dhabi Investment Authority (the world's biggest SWF with assets of about US$900 billion), and Government of Singapore Investment Corp (GIC) to discuss draft rules that will govern the behaviour of SWFs.

Both investment groups had recently injected huge funds to Citigroup, Merillyn Lynch and UBS which are hit by huge write off from the US mortgage crisis. In fact, Swiss giant UBS's shareholders had just approved last night an 11 billion Swiss franc injection by GIC, apparently in a tense and marathon meeting.

It is interesting to note that there's a growing suspicion over government-owned investment funds, particularly those owned in Asia (esp. China & Singapore) and Middle East. Perhaps it is due to their unwillingness thus far to disclose much about their operations. But I think it would be unwise of European and US government to increase protectionism over these funds due to their own suspicion.

The questions they should perhaps ask themselves : Have their dominance and injection of investment, perhaps mainly by huge private coporations, in the world raise eyebrows? Or were these viewed purely as business invesments? Why is there fear of rising dominant Asia and Middle East?

Have they "moved your cheese"?

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