Sovereign fund assets to hit $8trln by 2015-report
LONDON, Nov 16 (Reuters) - Sovereign wealth funds' assets may grow by 10-15 percent a year to $8 trillion by 2015 and their desire to shift away from the dollar would encourage them to invest in emerging economies, according to a new report.
The paper by the Independent Treasury Economic Model (ITEM) Club, due to be released this week, also said China's wealth fund's assets may have hit $300 billion while Iraq is a potential candidate for building up a large sovereign fund given its oil resources.
Sovereign wealth funds (SWFs), mainly from resource-rich emerging markets, are estimated to manage assets of around $3 trillion.
Their total assets shrank during the credit crisis given their large investments in the Western financial sector, but recovering global economy and resource prices are set to bolster their growth in the next few years. "The largest and most active SWFs will be in those countries with the largest stockpile of reserves, including China, Singapore, Abu Dhabi and Qatar," the UK-based group said. "In line with the growing power of the emerging markets and the associated changes in patterns of global trade and investment flows, as well as a desire to lessen dependence upon U.S. dollar assets, it seems likely that SWFs will seek to invest more in the main emerging markets, which in turn would also signal a diminishing focus on financial services as a target for investment."
The report also said that the China Investment Corporation, which was established in 2007 with $200 billion of assets, is now estimated to have funds totalling around $300 billion.
Some emerging economies, especially from Africa, are also in the process of setting up a new sovereign fund to manage windfall revenues from resources.
"Given its oil resources, Iraq is another potential candidate for building up a large SWF, but in the near term the political obstacles remain significant and the initial need for infrastructure spending will consume most of current oil revenues," it said.
For a list of stories on SWFs click on [nL236030]. (Reporting by Natsuko Waki; Editing by Andy Bruce)
