Given current regulations regarding SWFs, the US and EU have no right to attack emerging economies on how they invest.

The growing influence of sovereign wealth funds (SWFs) and their increased willingness to flex their investment muscle has led to much gnashing of teeth among politicians, pundits and economists.

Whether it be Clay Lowery, acting undersecretary for international affairs at the US treasury, or German chancellor Angela Merkel calling for greater regulation governing what sovereign wealth funds are able to buy, or others clamouring for greater scrutiny and debate over their activities, by and large, the response to this increasingly visible phenomenon has been negative.

This is surely disingenuous. Are countries like the US and those of the EU saying it is fine for emerging markets to subsidise their deficits by investing in government bonds, but not for them to buy direct stakes in other assets?

The fact that the ‘West’ defends its defensiveness by saying the asset is ‘sensitive’ simply reveals the hypocrisy of the western market ideology that ownership does not matter.

More importantly, the furore suggests that the West has little faith in the regulatory and governance frameworks that it has built to safeguard its markets and its corporate health. Yes, there should be rules on how certain assets are run, but these should be in place no matter who owns those assets. Thus rules exist to ensure that ports are managed in such a way that limits the risk of the importation of prohibited items, or that companies engaged in sensitive areas such as defence conduce their business in a manner commensurate with the laws that govern them.

If regulations are sound, then sovereign wealth fund holders can only behave like any other investor; moreover they should be welcomed as evidence of increasingly mature capital flows.

If the regulations are unsound, then it is up to West to fix them, rather than demonise ‘non-Western’ investors.

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