SWFs by the Caspian
The world’s leading sovereign wealth funds are gathering in Baku, capital of Azerbaijan, for a two-day inaugural meeting which ends on Friday.
A year after adopting the Santiago Principles of best practice guidelines, they are meeting next to the Caspian sea to review investment activities and assess how regulation and efforts to open up are helping them gain wider acceptance in a still-sceptical world.
The participants include SWFs from China, Kuwait, Azerbaijan, Australia, Libya, Ireland, Singapore and New Zealand. The meeting is hosted by the State Oil Fund of Azerbaijan – which made a record (and rare for SWFs) profit last year thanks to a conservative investment strategy. The $11-billion fund, which made a record profit of around $300 million, or 3.7-3.8 percent in 2008, has said it wants to add riskier assets back onto the portfolio gradually.
The meeting comes as a report to be published this week shows a sharp fall in investment activity in Q2. According to global consultancy Monitor Group, SWfs made 11 investments totalling $3.5 billion in Q2, the lowest spending since the final three months of 2004.
Nineteen deals have been either announced or pending completion during the three months ending June, suggesting that activity might improve later this year. Monitor says the funds returned to investing in real estate after they had steered well clear over the previous two quarters.
“SWFs are cautiously returning to the market with a long-term approach to their investments, putting their losses behind them and resuming the business of investing abroad,” it says.
(Photo by Natsuko Waki)