Abstract
Sovereign Wealth Funds (SWFs) lie at the cutting edge of a tectonic transformation in global business and international law embodying the sweeping changes in the global order. Illustrating the new financial and legal paradigm, SWFs demonstrate the blurring of lines between public actor states and private market actors. Ostensibly entrusted with the advancement of the public good of their respective citizenry, SWFs traditionally invested their vast pools of capital in apolitical, non-controversial, conservative government debt. Starting around 2006–2007, SWFs initiated an aggressive campaign of diversification and commenced allocating their immense investment capital into equity markets, real estate, energy projects, farming and private equity. This significant change led to SWF investment becoming inextricably linked to strategic industries in recipient nations. Simultaneously, apprehension developed in capital recipient nations with respect to potential non-financial motivation of SWF investment and the ...
Highlights
We find evidence of technological transfer and increased competitiveness for China and Singapore
“Rather than deter foreign investors like Sovereign Wealth Funds (SWFs) with the threat of increased and uncertain regulation, nations should rely on a well-established alternative dispute resolution body such as the International Centre for Settlement of Investment Disputes to monitor and enforce accepted practices of foreign investors.”120 According to this proposal, terms of an investment treaty121 would be violated if the sovereign wealth funds (SWFs) attempted to use the investment for political ends
“China Investment Corp (CIC), a $300 billion sovereign wealth fund based in Beijing, filed its first quarterly disclosure on US equity holdings, reporting that it owned stocks valued at $9.63 billion as of December 31.”262 To tackle the problem of non-reporting, the Securities and Exchange Commission (SEC) should employ an aggressive approach and the SEC should establish a special department dedicated to monitoring 13(f) filings to ensure all SWFs are in compliance
Summary
At the vanguard of the new global financial architecture where East, West, North and South converge, and the borders between public and private actor blur, are state-owned financial superstars known as sovereign wealth funds (SWFs). Ever controversial, SWFs are ostensibly entrusted with the advancement of the public good of their respective citizenry. SWFs are not new and have existed for decades. Historically, SWFs invested in apolitical, non-controversial, conservative government debt. from approximately 2006-2007, SWFs began a concerted effort at diversification, allocating their immense investment capital into equity markets, real estate, energy projects, farming, and private equity. This paradigm shift led to SWF investment becoming inextricably linked to strategic economic sectors in recipient nations. Simultaneously, concerns arose with respect to possible non-financially motivated decisions and the implications to national geo-political interests. In response, SWFs emphasized they were not interested in exercising. SWFs have recently steered towards a more activist investment approach similar to other major investors.12 This new activism – which includes partnering with other large investors – both private and public – renews concerns with respect to foreign government influence over political decision-making in host nations as well as undue dominance over strategic industry and infrastructure.. This new activism – which includes partnering with other large investors – both private and public – renews concerns with respect to foreign government influence over political decision-making in host nations as well as undue dominance over strategic industry and infrastructure.13 Illustrating these anxieties over nefarious investment motivations, the United States has increasingly become more active in scrutinizing business transactions either rejecting deals or insisting on post-deal divestment.. The proposed updates offer the specter of addressing legitimate concerns over SWF purchases of corporate stakes while simultaneously encouraging the free movement of capital necessary for a prosperous economy
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