Swfs

In: Business and Management

Submitted By threevon
Words 562
Pages 3
Sovereign Wealth Funds comes into spotlight

1) Introduction

Sovereign Wealth Funds (SWFs) were almost unseen in the past. Due to the US subprime mortgage debacle, SWFs has been brought into the spotlight. An ever growing number of SWFs worldwide was thought to precipitate tectonic shifts in global equity and foreign exchange markets. Unlike central banks, the SWFs are more likely to invest in emerging nations rather than the developed countries. Stephen Jen, the managing director and chief currency economist at Morgan Stanley, says that the trend for SWFs to move away from sovereign debt to assets that generate higher returns, including financial, resources, tech, and infrastructure plays, is a natural outcome of the globalization financial markets that seeks to adjust existing global imbalance. Based on the diverse investment nature of SWFs, the global fund industry anticipates huge opportunities to make money off the SWFs. At the same time, SWFs are believed to have a stabilizing role in global markets, helping to resuscitate struggling financial institution. This is based on two prominent features of SWFs. One is its longer investment horizon. The other is its greater tolerance for swings in the balance sheets. Despite the optimistic point of views on SWF, potential problems regarding transparency, potential interference and its effect on currency markets have been revealed. Other challenges faced by SWF are about its conservative nature and apparent impact on capital markets according to Jonathan Anderson, the chief economist at UBS Asia-Pacific.

2) As a business student, it is inevitable for us to read business cases. However, enjoy reading them or not is a problem. There are many ways that can make business cases become interesting. But to me, an interesting case should contain two elements. First, it is not necessarily about multinational dragons. The…...

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