Monitor Group Releases 2010 Annual Sovereign Wealth Fund Report; Finds Investment Numbers Increased with Focus on Banking, Insurance and Trading Companies
The boiler plate has been replaced.
The corrected release reads:
THE NUMBER OF SOVEREIGN WEALTH FUND INVESTMENTS INCREASED BY OVER 50 PERCENT IN 2010 AS MANY FUNDS TURN THEIR ATTENTION TOWARD EMERGING MARKETS
Monitor Group Releases 2010 Annual Sovereign Wealth Fund Report; Finds Investment Numbers Increased with Focus on Banking, Insurance and Trading Companies
Monitor Group, one of the world's leading advisory and consulting firms has today released its annual Sovereign Wealth Fund (SWF) report, titled Braving the New World: Sovereign Wealth Fund Investment in the Uncertain Times of 2010, which examines SWF transactions during the year. 2010 marks the beginning of a new pattern of SWF investment that equips investors to deal with economic realities in the wake of the global financial crisis.
"Since the global financial crisis, SWFs have built more in-house capacity. This means we can track more of their investments and create a more nuanced picture of SWFs' investment behavior. It is likely that we will continue to see SWFs taking a larger number of smaller stakes," said Victoria Barbary, senior analyst at Monitor Group and co-editor. "Contextualizing our data in the current economic environment suggests that commodities and other alternative assets will become an increasingly important asset class for SWFs. With SWFs keen to make good returns for their sovereign government owners, it may well be that they choose to increase their allocation to alternatives as they look to realign their portfolios with new economic results."
The global economic environment in 2010, although uncertain, was better than that of 2009 as SWFs have turned their eyes toward emerging markets. Asia in particular—not just China, but also India, Singapore, Indonesia and Malaysia—has seen a large influx of SWF investment. Yet Asia is not the whole story. Latin America, a region which previously received little direct SWF investment, has become popular with funds chasing alpha returns.
"These investment trends suggest that SWFs continue to act, as we have always argued, as financial entities, pursing economically driven strategies. Yet, as the recent 'Beijing Communiqué' from the International Forum of Sovereign Wealth Funds makes clear, SWF investment continues to cause some to suspect political motivations," said Bernardo Bortolotti, Professor of Economics and the University of Turin, who co-edited the report. "This may be exacerbated by the current social turmoil originating in North Africa and the Middle East."
Key Findings and Trends from the report:
- During 2010, 21 of the 30 funds in the Monitor-FEEM Transaction Database executed 172 publicly reported investments valued at $52.7 billion. This represents an increase of more than 50 percent in deal volume from 2009 but a 23 percent decrease in investment value, continuing the trend of SWFs making a greater number of smaller investments. It is also the largest number of funds we have witnessed making direct investments in any given year, up from 18 in 2009.
- Having witnessed a sharp break on direct SWF investments in financial services in 2009, they returned with gusto in 2010. Banking, insurance, and trading companies received a total of $20.4 billion in 50 investments—39 percent of the total annual value.
- SWFs also invested heavily in commodities—coal, petroleum natural gas, and metals—(26 investments , $6.9 billion), and ancillary industries—processing, renewable energy, energy transmission—(10 investments, $11 billion)
- For the past two years, Europe received the largest proportion of SWF direct investment by value. In 2010, this trend came to an abrupt halt as SWFs turned eastwards, with Asia Pacific, accounting not only for the largest number of investments (70—41 percent of the annual total), but also the largest proportion of recorded value ($25.2 billion –nearly half the total).
- Although emerging markets accounted for a similar portion of SWFs annual direct investment value as in previous years (58 percent, $30.4 billion), the absolute number and proportion of investments made in these markets increased substantially.
- In 2010, developing economies accounted for 103 investments (60 percent), from 72 (53 percent) in 2009. This trend was particularly evident in the second half of the year, when SWFs made 56 investments valued at $24.6 billion in emerging markets.
- In 2010, a distinct difference in investment patterns emerged between Asian and Middle Eastern SWFs. Asian funds invested half of their total expenditures in Asia Pacific ($11.5 billion) and 38 percent ($8.6 billion) in North America. Conversely, while Middle Eastern funds also invested 48 percent of their total investment in Asia Pacific ($13.5 billion), they bet on Europe, investing $7.5 billion in the region, and largely shunned North America.
- Singapore's Temasek Holdings was 2010's most active fund, making 38 investments, followed by the China Investment Corporation (23) and the Qatar Investment Authority (22). QIA and CIC were the largest spenders accounting for $12.3 billion and $9.8 billion investments respectively.
Braving the New World: Sovereign Wealth Fund Investment in the Uncertain Times of 2010 is the latest in a series of reports and updates documenting and assessing SWF activity. The report includes an analysis of SWF investment activity in 2010, a discussion of the sovereign wealth landscape, and commentary by outside experts including Patrick Schena (Tufts University), Sven Behrendt (Geoeconomica), Javier Santiso, (ESADE Business School), Ashby Monk (University of Oxford), and Thouraya Triki (African Development Bank), as well as by Monitor's Victoria Barbary. All reports are available at www.monitor.com/sovereignwealth.
For media inquiries around the report, please contact Heather Gitlitz (hgitlitz@racepointgroup.com).
About Monitor Group
Monitor Group works with the world's leading corporations, governments and social sector organizations to drive growth on the issues that are most important to them. The firm offers a range of services –advisory, capability-building and capital services – designed to unlock the challenges of achieving sustained growth. Founded in 1983, Monitor brings leading edge ideas, approaches and methods to bear on clients' toughest problems and biggest opportunities. Headquartered in Cambridge, Massachusetts, the firm employs over 1,500 people in 22 countries worldwide. For more information, visit www.monitor.com.
Contacts:
Monitor PR Contact:
Racepoint Group
Heather Gitlitz,
202-912-4902
monitor@racepointgroup.com
