The world's sovereign wealth funds (SWFs) have been hit hard by the global financial crisis, soaking up losses of an estimated 25% in 2008, according to a report issued last month. Most of the pain was felt in the financial sector, after a calamitous year for banks.
The report by the Arab Financial Forum found that 44% of those investments disclosed by SWFs were directed towards the financial sector and most of that was directed towards countries within the area of the Organisation for Economic Co-operation and Development. The size of SWFs soared by an estimated $700bn in 2008, to more than $3000bn, according to a report. Of that $350bn worth of investments were disclosed.
Although it is early days to discern a post-crisis strategy, the report suggested that many SWFs are turning increased attention to the development of local financial market capacity. This could be achieved by buying expertise from foreign financial markets - such as Borse Dubai's investment in Nasdaq - or focusing on sectors such as insurance and asset management that would improve local market liquidity, the report said.
