800 Pound Market Gorillas
Tuesday, August 28, 2007 - FreeMarketNews.com
As if the prevalence of hedge funds, automated computer trading "black boxes" wasn't' enough to deal death-blow from the blue to unwitting individual investors in today's marketplace, now comes another omnivore able to crush just about everything in its path – the "sovereign fund."
As if the prevalence of hedge funds, automated computer trading "black boxes" wasn't' enough to deal death-blow from the blue to unwitting individual investors in today's marketplace, now comes another omnivore able to crush just about everything in its path – the "sovereign fund."
Scotiamocatta.com, a member of Scotia Bank Group, in its June report discusses this concept, noting: "Another potentially dollar bearish development is the growing interest by governments to set up sovereign funds. So far, as mentioned above, dollar diversification has focused on a few central banks spreading their reserves across a basket of currencies, but the next wave of diversification is likely to focus on commodities and other alternative investments. As China's move to set up a $300b sovereign-wealth fund to diversify away from the dollar, other countries are following suit."...Some estimates reckon that by the end of 2007, the assets in these types of funds could reach $2.5 trillion dollars. This compares to the estimated 1.6 trillion dollars that hedge funds have under management. In addition, it is thought that these funds could grow by $450bn a year. David Galland, editor of Casey Research writes:"Not only can the new money-bags move markets, up or down, in a big way… but, as commented on in a recent edition of this column, the attempt to unload some of their cash for tangible assets can and already is causing some serious talk of protectionism. We mention this again here, because it is a powerful new force in the market and one to keep a very close eye on." Staff Reports - Free-Market News Network
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