Sovereign-wealth funds, which are among the world’s biggest stock-market players, are unleashing more of their firepower at home, as governments lean on them to reboot pandemic-stricken economies. The funds made about $12.7 billion in new investments directly into companies and projects in their domestic economies in 2020, more than triple the amount in 2019, according to the International Forum of Sovereign Wealth Funds, or IFSWF. So far this year, sovereign-wealth funds have invested some $4 billion at home, about the same as in all of 2019. “There is a general shift away from investing in international markets, to demonstrate the value of sovereign-wealth funds to citizens,” Victoria Barbary, the forum’s strategy director, said. “Countries planning new sovereign-wealth funds are increasingly focused on investing at home. This is a trend that Covid has accelerated.” Sovereign-wealth funds manage trillions of dollars on behalf of nations, and where they direct their money can have a major impact on markets. Their mandates vary. Some invest anywhere, while others can invest only internationally or domestically. Among the funds permitted to invest anywhere, since the coronavirus pandemic struck, domestic investment jumped to 44% of the total, up from 22% in the three years leading up to March 2020, according to research firm Global SWF. Funds in Kuwait, Malaysia, Singapore, Saudi Arabia and the United Arab Emirates are investing more domestically, Global SWF said. Singapore’s Temasek Holdings has invested $8.9 billion in Singapore Airlines during the pandemic. Turkey’s sovereign-wealth fund invested $5.8 billion in 2020, mainly in local banks and insurers and in mobile-phone operator Turkcell Iletisim Hizmetleri, according to the IFSWF. The Ireland Strategic Investment Fund allocated 2 billion euros, the equivalent of around $2.4 billion, to a so-called Pandemic Stabilisation and Recovery Fund in 2020. For a longer version of this article online, follow this link. Will sovereign-wealth funds retain their domestic focus in the years to come? Let us know by replying to this email. Your comments may be edited before publication in future newsletters, and please make sure to include your name and location. |