2009 was a big year for SWFs. After shaking off the international political woes of 2007 and navigating a disastrous market in 2008, 2009 was a year for SWF growth, broadly defined. I actually managed to write almost 200 blog posts this year. With this in mind, I decided to go back through my archive and give you my ‘top five SWF stories to remember’ from 2009:
5) Cheaters: I’ve now come to accept that there are two communities of people who can cheat markets by taking advantage of SWFs. The first is front-runners. The second is the SWF sponsors. I admit that this wasn’t a huge story in 2009. But I think the anecdotal evidence from this year may foreshadow problems for the future. So, it’s in my top five stories to remember because I think it will be a topic we come back to in 2010 (…though I hope not…).
4) Santiago Principles: I’ve had many people tell me that the GAPP / Santiago Principles are too weak to do any good. I disagree. I think they were an important milestone in legitimizing these funds internationally. Put simply, this was a community building process that facilitated understanding, education and advocacy. This was desperately needed. (I should note that the GAPP actually came out in 2008; so I’m referring more to the ongoing international process, which is being taken forward by the new International Forum.)
3) SWF Cooperation: SWFs are increasingly making joint strategic investments, or coming together in joint funds, in order to better manage investment risks and maximize returns. This is a good thing.
2) New SWFs: For those that thought the global financial crisis would mark the end of SWFs, think again. 2009 was a banner year for these government owned special purpose vehicles. From Greenland to Angola to Papua New Guinea, I managed to count 14 funds at various stages of consideration or creation. Clearly, SWFs have never been more popular than they are now.
1) The CIC: After dropping the ball in 2007 and riding out 2008 in the penalty box, 2009 was the year of the China Investment Corporation. By some accounts, it spent $50 billion internationally this year. As I said recently, it was singing in the rain. Also, it is remarkable how many of my blog posts this year touched on this fund; it simply dominated my coverage.
Honorable Mentions: I thought about including the widespread restructurings that took place in 2009. From Alaska to Singapore, SWFs were re-evaluating their internal procedures; I thought that was a pretty big deal. I also nearly went for the Dubai World fiasco, but decided to leave it. It seems too early to know what the implications are from this fund’s woes.