By Daisy Ku
Investment made by sovereign wealth funds almost half volume invested in 2007, data shows.
Driven by western banks' need for fresh capital, investments made by sovereign wealth funds reached $24.4 billion in the first two months this year, already almost half the volume of last year, Dealogic data showed.
Sovereign funds, which totalled about $3 trillion globally, saw their investment surge 165% to $48.5 billion in 2007, compared with $19.2 billion in 2006 and $8.2 billion in 2005.
As the subprime crisis forces Wall Street and European banks including Citigroup, Merrill Lynch, Morgan Stanley and UBS to make billions of dollars of writedowns, sovereign wealth funds had injected $54 billion in the financial sector since September, Dealogic data showed.
Singapore, which has $689 billion of funds under management through Temasek Holdings and Government of Singapore Investment Corporation (GIC), had invested about $42 billion between January 2007 and February 2008, accounting for 57% of the total sovereign fund investments globally in the period.
That was followed by UAE's $10.7 billion and China's $8 billion.
But sovereign fund might be tightening the taps after seeing shares plummet in firms in which they have invested.
Singapore, for example, saw Citigroup shares drop 30% since it agreed to inject funds, along with Kuwait Investment Authority (KIA) and other private investors on January 14. UBS shares plunged some 50% after GIC agreed to buy a 9% stake in the Swiss bank on December 10. (Reuters)