Sovereign wealth funds: Panic
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Sovereign wealth funds: Panic

There is public and political pressure to keep out or at least regulate sovereign wealth funds. It must be resisted

(This article appears courtesy of International Financial Law Review, sign up for a free trial on their site)


IFLR's journalists in London, New York and Hong Kong all agree: people are overreacting to sovereign wealth funds.

These controversial investment vehicles have become increasingly political since the turn of the year. French President Nicolas Sarkozy spoke out against them and German Chancellor Angela Merkel reinforced her stance against them. Even in the midst of the US race for President, Hillary Clinton tried to turn the topic into a vote winner.

But lawyers all round the world say the same thing: sovereign wealth funds are old news, there is no need to panic and any reaction needs to a considered one.

At the moment, it is estimated that the top sovereign wealth funds hold around $2.5 trillion in assets. By 2015, this is expected to have risen to $12 trillion. China Investment Corporation can already afford to buy Morgan Stanley four times over. Imagine what it could purchase by the middle of the next decade. So despite a general feeling among lawyers that alarm is unnecessary, government panic will persist and action is inevitable.


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