As Leaders Gather, SWFs Warn of Protectionism

(November 19, 2009) – With Pacific Rim leaders gathered in Singapore this past week to discuss a variety of issues, sovereign wealth funds (SWFs) warned that group that any global recovery could be affected negatively by restrictions on capital flows.

Sovereign funds from nations as disparate as Norway, Kuwait, and Singapore told the gathered leaders—including United State President Barack Obama—that, as sources of large amounts of long-term capital, SWFs were the best hope for global recovery.

“I would like to emphasis the importance of keeping global capital markets open,” Deputy Chairman of the Government of Singapore Investment Corporation Tony Tan said on a panel for Asian-Pacific Economic Cooperation (APEC) business leaders. “If governments close their capital markets to sovereign wealth funds, recipient countries will face higher capital costs, while sovereign wealth funds will see their opportunity set decrease,” he told regional CEOs and politicians.

China Investment Corporation Chairman Jin Liqun added: “”Sovereign wealth funds do not join the chase for excessively high returns. Sovereign wealth funds have helped stabilize the global economy. They stay put when others are pulling out, or inject new capital in financial institutions or other businesses.”