Up to $700 billion of European stocks, including major banks, could be in the firing line as the slump in oil prompts some producer countries' sovereign wealth funds to offload investments.
Fund managers and investors say recent sharp selloffs in global markets and especially European stocks may have been exacerbated by national rainy-day funds selling parts of their equity portfolios to ease squeezed public finances.
That might also help explain why European bank stocks have lost nearly a quarter of their value since the start of the year, a $240 billion wipe-out more brutal than at the start of the financial crisis in 2008.
"I suspect there has been some liquidation across the board by some funds," said Kevin Gardiner, global investment strategist at Rothschild Wealth Management.
"It's hard to be sure, but it's quite likely that some sovereign wealth funds in oil-producing countries have felt the need to plug the gap in their budgets."
Worries about oversupply in the oil market and a slowdown in China, the world's second-biggest economy, have renewed the long slide in crude prices this year, slashing revenues for producer nations such as Norway and Saudi Arabia and hitting currencies.
Their sovereign wealth funds grew rich during oil's long rally, but crude prices have collapsed from above $100 in June 2014 to a 12-year low of $27.10 last month.
Few sovereign wealth funds report their stock holdings across sectors and regions, but based on information from those that do, JP Morgan's global market strategist Nikolaos Panigirtzoglou estimates that oil producers' funds hold around $2 trillion of publicly listed equities worldwide.
Extrapolating further, he estimates that up to $700 billion of that total could be invested in western European equities, with between a quarter and one-third in banking stocks.
Like Gardiner, Panigirtzoglou thinks it is likely that sovereign wealth funds have been selling down some of their holdings in recent weeks.
"It's not a flow that you can easily detect as some of that selling is being executed by high frequency trading companies," Panigirtzoglou said.
Norway's sovereign wealth fund, the world's largest at more than $810 billion, hinted this month at an active management style that could entail selling its equity assets.
Egil Matsen, the central bank official supervising the fund, told Reuters that the fund would retain its aim of outperforming global markets.
In its last available quarterly report, the fund said it was worth 7,019 billion Norwegian crowns ($816.61 billion), of which 60 percent was invested in equities.
Global financial stocks accounted for 23.5 percent of this overall equity portfolio, while European stocks represented 40 percent of the Norwegian fund's overall equity holding - roughly $200 billion worth.
Its major European stock investments included Nestle, Royal Dutch Shell, Novartis, Roche , HSBC and Sanofi.
The Qatar Investment Authority meanwhile has big stakes in Volkswagen, Barclays, Credit Suisse, Sainsbury and Glencore.
China has its own sovereign wealth funds which, though less exposed to oil, could start selling off assets as the economy stalls. Among their holdings are stakes in major Italian banks.
CrossBridge Capital strategist Manish Singh said that while there was no hard evidence, the notion that sovereign wealth funds are selling some of their European equity holdings was plausible and could explain of this year's sharp stock falls.
"Sovereign wealth funds went into European financial stocks in a big way a few years ago, so that could be one of the reasons why that sector has been hit this year, as they liquidate positions to raise cash," said Singh.
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