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The emergence of sovereign wealth funds

3 min reading time

Published on 08/01/08 - Updated on 17/03/22

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While the financial crisis continues to upset financial markets, sovereign wealth funds are considered by some observers to be potential white knights of the world economy. “I do not exclude the possibility of these major funds injecting capital stock in the international bank system which is greatly in need of it,” foreshadowed André Martinez, Managing Director and Chairman of Global Lodging at Morgan Stanley Real Estate, at the end of November. And the hunch was accurate as the Abu Dhabi Investment Authority (ADIA) injected 5 billion euros in Citigroup, the biggest bank worldwide and one of those hit the hardest by the subprime crisis. The largest sovereign wealth fund in the world has a certain amount of financial affluence with assets estimated at between 450 and 600 billion euros.

While China, through indirect means, owns part of the Hilton Group, the major maneuvers of sovereign wealth funds concentrate on other sectors with, as recent examples, Dubai Capital’s investment in Sony and the investment of Chinese and Singaporean funds in Barclays Bank. Nonetheless, these...

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