Sovereign wealth funds lose their gloss

They have vast assets and highly secretive natures, and the Gulf’s sovereign wealth funds have been the source of much speculation over the past 18 months as bankers and officials have beaten a hasty path to their doors.

Their power and ambition initially drew a negative reaction from the west but suspicions have evaporated as the financial crisis has deepened. For desperate bankers it is as if the Gulf’s sovereign vehicles – with estimates of their overall assets ranging up to $1,500bn – are a last resort of funding.

But those clinging to that perception have been forced to rethink.

SWFs have taken a battering themselves as equity markets have collapsed. Analysts suggest that they may have incurred losses of 25 per cent to 30 per cent.