Reprinted from Global Investor Magazine
Oct-24-2008; Sovereign wealth funds (SWFs) are shifting investments away from the United States and Europe and into the Middle East and Asian economies, according to research released by the global consulting firm Monitor Group.
The trend, first picked by Monitor in a report earlier this year, indicates that SWFs are not exploiting current US or European downturns, but are focused on building opportunities in potentially lucrative emerging markets in the Middle East and Asia. Investments in these regions accounted for 68% of the total value of all publicly-traded deals in this period.
In the second quarter of 2008, funds in the Monitor SWF transaction database executed 43 deals totalling $26.5 billion, compared with 42 deals totalling $58.3 billion during Q1.
SWFs continued to invest actively in emerging markets. In Q2, more than half the deals and funds invested were in emerging markets. SWFs carried out 26 deals and invested $15 billion in BRIC and non-OECD countries. Half of the deals by value were in real estate in Q2. Real estate had the largest number of deals (12) and the highest investment ($13.7 billion) in Q2 2008.
Investment in North America has dropped dramatically. In Q2, just four deals totalling less than $1 billion were received by North America, a steep drop from the seven deals totalling $23 billion during the previous quarter.
Another discernible shift in the last period reviewed has been a move away from financial services. SWFs carried out 10 deals and invested $4 billion in the financial services sector during Q2 2008. In the previous quarter, funds carried out 13 deals totalling $43.4 billion.
"Our transaction data shows that SWFs have focused recent equity investment away from volatile geographic markets and sectors, like North America and financial services, and are instead seeking more attractive returns in emerging markets and other sectors, including real estate," said William Miracky, senior partner of Monitor Group.
Monitor Group collected and investigated data on the 17 SWFs originally identified in the June report entitled "Assessing the Risks: The Behaviours of Sovereign Wealth Funds in the Global Economy." Only nine of the 17 had publicly-reported deals in Q2.
The value of the deals was relatively evenly split between Middle Eastern and Asia-Pacific funds. The five Middle Eastern funds made 25 deals with a reported value of $13.5 billion in Q2, or 51% of the total SWF spend for the quarter. The four Asia-Pacific funds made 20 deals with a reported value of $12.9 billion.
Oct-24-2008; Sovereign wealth funds (SWFs) are shifting investments away from the United States and Europe and into the Middle East and Asian economies, according to research released by the global consulting firm Monitor Group.
The trend, first picked by Monitor in a report earlier this year, indicates that SWFs are not exploiting current US or European downturns, but are focused on building opportunities in potentially lucrative emerging markets in the Middle East and Asia. Investments in these regions accounted for 68% of the total value of all publicly-traded deals in this period.
In the second quarter of 2008, funds in the Monitor SWF transaction database executed 43 deals totalling $26.5 billion, compared with 42 deals totalling $58.3 billion during Q1.
SWFs continued to invest actively in emerging markets. In Q2, more than half the deals and funds invested were in emerging markets. SWFs carried out 26 deals and invested $15 billion in BRIC and non-OECD countries. Half of the deals by value were in real estate in Q2. Real estate had the largest number of deals (12) and the highest investment ($13.7 billion) in Q2 2008.
Investment in North America has dropped dramatically. In Q2, just four deals totalling less than $1 billion were received by North America, a steep drop from the seven deals totalling $23 billion during the previous quarter.
Another discernible shift in the last period reviewed has been a move away from financial services. SWFs carried out 10 deals and invested $4 billion in the financial services sector during Q2 2008. In the previous quarter, funds carried out 13 deals totalling $43.4 billion.
"Our transaction data shows that SWFs have focused recent equity investment away from volatile geographic markets and sectors, like North America and financial services, and are instead seeking more attractive returns in emerging markets and other sectors, including real estate," said William Miracky, senior partner of Monitor Group.
Monitor Group collected and investigated data on the 17 SWFs originally identified in the June report entitled "Assessing the Risks: The Behaviours of Sovereign Wealth Funds in the Global Economy." Only nine of the 17 had publicly-reported deals in Q2.
The value of the deals was relatively evenly split between Middle Eastern and Asia-Pacific funds. The five Middle Eastern funds made 25 deals with a reported value of $13.5 billion in Q2, or 51% of the total SWF spend for the quarter. The four Asia-Pacific funds made 20 deals with a reported value of $12.9 billion.
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