According to a report by Standard Chartered Bank (StanChart) Global Research:

• Khazanah Nasional Bhd is among the top 20 sovereign wealth funds (SWFs) in the world which are also considered as “transparent.
• The report entitled “State Capitalism: The Rise of Sovereign Wealth Funds” listed Khazanah as the 12th largest SWF in the world with estimated assets of US$17.9 billion (RM60.86 billion) as of May 2007, accounting for 12.3% of the country’s gross domestic product
• Other SWFs that are transparent include those from Norway,Singapore,Alaska (US),Alberta Canada and Azerbaijan.
• Those with relatively low level of transparency include funds from the UAE, Kuwait, China,Qatar,Brunei,Venezula,Taiwan and Oman
• The report estimates SWFs are valued at US$2.2 trillion and if their current rapid pace of growth can be sustained, then in 10 years time SWFs can soar to US$13.4 trillion
• Currently, the largest SWF is the world is the Abu Dhabi Investment Authority from UAE with an asset size of US$625 billion, way ahead of the second largest fund, which is Norway’s Government Pension Fund with US$322 billion.
• Singapore had two SWFs in the top 10, namely the third-ranking Government Investment Corporation, with US$215 billion and Temasek at the seventh place with US$108 billion in assets.

About this Study:

The study identifies 20 SWFs, which are mainly investment funds owned by sovereign nation states. There is also a group of “super seven funds” each with over US$100 billion in assets.

The study was carried out with support from Oxford Analytica for an independent perspective, as some SWFs are shareholders in StanChart.

StanChart Global research chief economist Gerard Lyons said

• the influence of SWFs on global financial markets was set to grow
• Western countries might need to accept the rise of SWFs as a further sign of a shift in the world economy and should seize this as an opportunity to work with emerging economies such as China and Russia, countries in the Middle East to find common ground rules and a code of practice;
• expect these government controlled funds to take bigger financial stakes in equity and bond markets across emerging economies, to feed more money into alternative investments such as hedge funds and private equity, to boost strategic links with countries that have not shared fully in the benefits of globalisation or which have been shunned by the West, and to take more strategic stakes in sensitive areas within developed countries
• the report also highlighted a strong case for SWFs to adopt the best practice of open funds like Norway.
• However, many governments will argue that it is their money and why should they be so transparent when so many other areas of financial markets are not
• It also said countries of these SWFs should also open up their markets. “If not, then protectionist pressures will come to the fore, risking a clash between Western governments and SWFs. Already, this is happening ,with more signs of a hardening of stances across Europe

(Source:The Star Malaysia17/10/07)