Coronavirus ends ‘golden’ era for sovereign wealth funds | Financial Times:
The “golden age” of sovereign wealth funds has ended, according to academic research that predicts the coronavirus pandemic will result in profound changes for the state-backed investment vehicles.
Sovereign wealth funds, which oversee $6tn globally, are being tapped by governments to stabilise budgets and mitigate the effects of the economic fallout of the pandemic, according to academics at Bocconi University, New York University and London School of Economics.
SWFs linked to commodities such as oil, in particular, are “facing the most severe adverse shock in their history”, with the pandemic adding to problems such as low oil prices and declining hydrocarbon revenues.
“The Covid-19 crisis is a turning point in the history of SWFs. This dramatic, unexpected shock accelerates the pre-existing negative trend of declining oil prices and slowing of global trade, the two main drivers of SWF growth,” said Bernardo Bortolotti, an economics professor and one of the report’s authors.
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