2008 November 26 Wednesday
Sovereign Wealth Funds Shift Out Of West

If Sovereign Wealth Funds are so formidable why are their managers shifting out of the West at the bottom of the market? (or at least close to the bottom)

Sovereign wealth funds in the Gulf are switching their focus away from Western stock markets to shore up ailing economies in the Middle East and protect themselves from losses in the City and on Wall Street.

Investment funds in Kuwait, Qatar, Dubai and Abu Dhabi are understood to be changing their investment strategies after losing billions of dollars buying shares in Western companies. Several Gulf-based banks are being propped up with state investment. Local stock markets have collapsed and some funds are shifting their assets into local shares in an attempt to inject confidence.

Government-run investment funds aren't going to out-perform the market in the best of times. But if they sell at the bottom they are really going to under-perform. Also, shifts toward Middle Eastern investments seem like an unwise way to make up for the losses. The Middle East still has some boom times ahead of it when oil prices recover. But eventually depleting oil fields will send the Middle Eastern oil sheikdoms into economic decline. East Asia would be a better bet.

Share |      By Randall Parker at 2008 November 26 07:54 AM  Economics Sovereign Funds


Comments
Thai said at November 26, 2008 2:22 PM:

Maybe not so stupid after all...

I have a question for you (I read it posed on another blog): when this is all said and done, do you think the dividend yield on the S&P 500 will be higher than the rate paid on US treasuries?

Stephen said at November 26, 2008 2:48 PM:

In other news, there are signs that the T-bond market is failing...

Bob Badour said at November 28, 2008 3:36 PM:

Bottom? Bottom of the market? Who said bottom?


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