Foreign states buy up West ... a number of trends are prompting concern among governments in Europe and America, and stirring up protectionist sentiments. For a start, new funds are being set up. China is creating a $300 billion fund that some believe could grow by a mind-boggling $250 billion to $300 billion a year. Early next year, Russia, which already has a $24 billion vehicle, plans a $30 billion Future Generations fund, which many expect to grow by $40 billion a year. Japan is considering diverting $700 billion from its vast foreign reserves to set up a sovereign-wealth fund investing in overseas assets. In a bid to boost returns, the funds' investments are being switched from low-yielding assets such as US treasury bonds to equity stakes and even outright takeovers. The targets: companies in America and western Europe, particularly in "strategic" areas such as technology, transport, oil, commodities and financial services. No wonder governments are worried. "These funds are going to have the ability to buy any global company, to create panic in markets if they move too precipitously, even to dwarf the political clout of international financial institutions. They can no longer be ignored," wrote Jeffrey Garten, professor of Yale School of Management. Many predict government bond prices will fall and yields rise as sovereign-wealth funds move their assets elsewhere. "The idea of private, state-run funds buying public companies in developed countries can create fear - partly because the threat is from China. It is a fear of the unfamiliar," said one investment analyst. <...> Critics argue that sovereign-wealth funds lack transparency and are politically motivated. Others are alarmed at how state-owned firms could be used alongside the funds to grab strategic assets. The Kremlin has been accused of using the gas giant Gazprom as a tool for its foreign policy. Not all funds are secretive. Norway's $320 billion Government Pension Fund, set up in 1990, is a model of openness and in a bid to not distort markets takes an average stake of less than 1% in a company. <...> Some funds are trying to face down the protectionist fears. Simon Israel, executive director of Temasek, which owns 16% of Standard Chartered and a stake in Bar-clays, has been on a charm offensive. Israel is at pains to point out the Singaporean fund is different because it is not "state-directed" and its corporate-governance standards mirror those of a listed company. Critics say this stretches a point since five of the Temasek board are former or current members of the state apparatus and the chief executive, Ho Ching, is the wife of the prime minister.
... a number of trends are prompting concern among governments in Europe and America, and stirring up protectionist sentiments. For a start, new funds are being set up. China is creating a $300 billion fund that some believe could grow by a mind-boggling $250 billion to $300 billion a year.
Early next year, Russia, which already has a $24 billion vehicle, plans a $30 billion Future Generations fund, which many expect to grow by $40 billion a year. Japan is considering diverting $700 billion from its vast foreign reserves to set up a sovereign-wealth fund investing in overseas assets.
In a bid to boost returns, the funds' investments are being switched from low-yielding assets such as US treasury bonds to equity stakes and even outright takeovers. The targets: companies in America and western Europe, particularly in "strategic" areas such as technology, transport, oil, commodities and financial services.
No wonder governments are worried. "These funds are going to have the ability to buy any global company, to create panic in markets if they move too precipitously, even to dwarf the political clout of international financial institutions. They can no longer be ignored," wrote Jeffrey Garten, professor of Yale School of Management.
Many predict government bond prices will fall and yields rise as sovereign-wealth funds move their assets elsewhere.
"The idea of private, state-run funds buying public companies in developed countries can create fear - partly because the threat is from China. It is a fear of the unfamiliar," said one investment analyst.
<...>
Critics argue that sovereign-wealth funds lack transparency and are politically motivated. Others are alarmed at how state-owned firms could be used alongside the funds to grab strategic assets. The Kremlin has been accused of using the gas giant Gazprom as a tool for its foreign policy.
Not all funds are secretive. Norway's $320 billion Government Pension Fund, set up in 1990, is a model of openness and in a bid to not distort markets takes an average stake of less than 1% in a company.
Some funds are trying to face down the protectionist fears. Simon Israel, executive director of Temasek, which owns 16% of Standard Chartered and a stake in Bar-clays, has been on a charm offensive. Israel is at pains to point out the Singaporean fund is different because it is not "state-directed" and its corporate-governance standards mirror those of a listed company.
Critics say this stretches a point since five of the Temasek board are former or current members of the state apparatus and the chief executive, Ho Ching, is the wife of the prime minister.
"These funds are going to have the ability to buy any global company, to create panic in markets if they move too precipitously, even to dwarf the political clout of international financial institutions. They can no longer be ignored,"
The final triumph of capitalism - sold wholesale to the communists.
I'm sure Marx would have been pleased.
