Sovereign Wealth Funds Backing Away
Monday, March 17, 2008 - 11:38 am
Capital injections into banks and brokers are necessary to get us back on our feet. Domestic players like Citadel might be poking around the debris, but the implosion at Bear is leaving the foreigners skittish:
"We are digesting all the information that is pouring out of the U.S.," said Chairman Sultan bin Sulayem, whose state-owned Dubai World owns 6.6 percent of casino operator MGM Mirage. Asked if he would invest in the United States now, he said: "I don't know."
Qatar's prime minister, who heads the country's $60 billion sovereign wealth fund, told Reuters last month he would rather invest in European over U.S. lenders because U.S. bank stocks were likely to fall further on subprime-mortgage writedowns. Reuters
Shareholders of Chinese based Citic are probably breathing a sigh of relief. Their deal with Bear is now off the table, and investing c;loser to home is probably more appealing:
"Based on their earlier experience, sovereign wealth funds are going to be more hesitant," said Bill Belchere, regional economist at Macquarie Securities. "This would call for some diversification away from the U.S. dollar."
Belchere said Middle East sovereign funds are expected to diversify more across Asia. Hong Kong bankers say funds have indeed been running a slide rule over potential deals in the natural resources and financial sectors in China.
They might not be panicking, but they are sitting on their hands, and their piles of cash.
Sovereign funds steer clear of Wall Street
Reuters
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