Sovereign fund chiefs not created equal
By Una Galani
(The author is a Reuters Breakingviews columnist. TheÂ opinions expressed are her own.)
China Investment Corporation finally has a new boss. But compared to most companies, a change of the top at a sovereign wealth fund doesnât always mean a change of tack. A sovereign fundâs proximity to the government and its investment approach are critical when it comes to determining the importance, or relative unimportance, of who sits at the top.
Ding Xuedong, a career bureaucrat, may be relatively unknown in global financial circles. That neednât matter. His predecessor Lou Jiwei, who was promoted to finance minister in March, also lacked experience when he took charge of CIC when it was established in 2007.
But that didnât stop CIC from growing; the fund has more than doubled in size and now manages roughly 15 percent of Chinaâs $3.4 trillion foreign currency reserves. CICâs domestic portfolio is dominated by legacy stakes in the countryâs biggest banks and the fund outsources most of its overseas investments to external money managers. Unless the fund gets a big injection of new money, itâs unlikely Ding will get a chance to create waves.
By contrast, investors should pay more attention to Dingâs new rival in Qatar. The Qatar Investment Authority has a much more active approach to managing its $100 billion – $200 billion of funds. Ahmad al-Sayed was last week named as chief executive for the QIA. And whereas Dingâs appointment looks like political continuity, the Qatari appointment is a bigger shift, since Sayedâs predecessor was also the prime minister.
Sayedâs reputation as an aggressive dealmaker is unlikely to change. But Qatarâs new emir Sheikh Tamim, who is also chairman of the fund, now wants the country to âavoid arroganceâ. The QIAâs future investments may thus focus on delivering financial rather than political returns.
At the other end of the spectrum from CIC is Singaporeâs Temasek. Finding a successor to Ho Ching, who has led the fund for over a decade, will be more tricky, since Ho has transformed the fund from a passive into an active investor. Temasek is also independent from the government, even though Ho herself is the prime ministerâs wife. That means that the buck really stops with the CEO. Few sovereign fund bosses can say that.