Five Stories to Remember from 2009

Ashby Monk

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.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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