The West is on a 'collision course' with powerful government-controlled investment funds run by Middle Eastern and Asian states, a leading bank warned. Deep-pocketed sovereign wealth funds (SWFs), including the Abu Dhabi Investment Authority, China Investment Corporation and Russia's Stabilization Fund, will spend hundreds of billions of dollars on strategic acquisitions in coming years.
Standard Chartered claims ambitious governments are using these highly secretive funds to purchase key stakes in major industries such as technology, telecoms, energy and financial services.
It could allow them to import western intellectual property and scientific expertise by the back door. Chief economist Gerard Lyons said: 'The economic rationale behind such strategic acquisitions is clear.
'Some countries see this as a way to move up the value curve quickly, as they acquire intellectual property and access to research, design and development that may take years to develop at home.'
As a result, he warned that 'a protectionist backlash against strategic investments is very real and threatens global trade.'
There are signs this is already under way. America is expected to press for restrictions to opaque investment vehicles at a meeting of the Group of Seven nations in Washington later this week.
It hopes regulation might dim the appetite for such deals, although the US has been adept at pulling down the shutters to foreign investors when it feels its national interests are threatened.
The firepower of these vast state-backed funds is demonstrated by Qatar's protracted £10.6bn takeover of Sainsbury and the Dubai and Qatari stakes in the London Stock Exchange.
Lyons urged governments to sign up to a code of conduct to prevent a 'collision' over the activities of SWFs.
And he warned that the transparency of many funds leaves much to be desired. In its 30 year existence, the Abu Dhabi Investment Authority - the world's biggest SWF - has never even disclosed the value of its assets. Estimates range between £123bn and £492bn.
Standard Chartered, which conducted the research with Oxford Analytica, said the total value of SWFs is around £1trillion, which could swell to £6.6trillion in a decade.
Comment: The preceding has been going on for some time. It usually does not make the news and it is is certainly boring. thus it flies under the public radar.We citizens need to hear from our government and business leaders to ascertain their respective positions. This can bring down a nation without firing a shot.
No comments:
Post a Comment