Breakingviews - Sovereign funds are having their rainy-day moment - Reuters

Breakingviews - Sovereign funds are having their rainy-day moment - Reuters:

Sovereign wealth funds are having their moment. These state-owned outfits come in a dizzying array of shapes and sizes. But they are all mostly considered as “rainy-day” funds for future generations. As the Covid-19 pandemic pushes economies around the world to their limits, these vehicles will play a big role in managing the fallout.

The clearest example so far is in Singapore. Temasek stepped up this month to back a $1.5 billion recapitalisation of Sembcorp Marine, a shipbuilding and repair group. Earlier this year, the fund underwrote most of a $13 billion funding package for Singapore Airlines. These deals, assisting two industries that support as much as one-fifth of the city-state’s GDP, might be viewed as investments as much as bailouts thanks to a long-term return horizon.

A stronger economy will indirectly shore up Temasek’s other local investments: Singapore makes up 26% of the group’s total portfolio, valued at $224 billion. It’s notable that Temasek prefers to be known as an “investment holding company” which makes decisions at an arm’s length from the government and has a higher risk appetite than its more traditional peer and compatriot GIC. It is still a sovereign fund of sorts, though.