Asia has more than one third of global sovereign assets – study
Asia accounts for 39% of the $5.2 trillion in sovereign wealth fund (SWF) assets globally, with China alone holding $1.49 trillion, according to a new study.
In addition to the $5.2 trillion in sovereign funds - a record high, following an 8% year-on-year increase in 2012 - a further $7.7 billion is held by other sovereign investment vehicles, such as pension reserve funds and development funds.
TheCityUK, the group tasked with promoting Britain's financial services industry and the publisher of the study, warned that estimates of the size of the SWF market differ widely due to varying definitions of these institutions as well as limited disclosure and lack of transparency.
However, SWF assets are expected to continue to grow as Asian countries, particularly China, accumulate more foreign exchange and commodity demand increases globally. TheCityUK projects that SWFs will control $5.6 trillion by the end of 2013.
Non-commodity driven funds - i.e. those that are not dependent on oil exports - are growing in size, accounting for $2.2 trillion of the total pool, and expected to continue gaining ground on their commodity-linked counterparts. Direct investments by SWFs came to a six-year low of $57 billion in 2012 as many funds switched focus to domestic markets.
The largest SWF is Norway's Government Pension Fund, with $664 billion in assets under management, followed by Abu Dhabi Investment Authority on $627 billion. China - including Hong Kong - occupies four of the top 12 places through the State Administration of Foreign Exchange (SAFE), China Investment Corporation (CIC), the Hong Kong Monetary Authority and the National Social Security Fund.
Of the other sovereign investment vehicles, America's Social Security Trust Fund and Japan's Government Pension Investment Fund (GPIF) account for about half the overall pool, with $2.6 trillion and $1.3 trillion, respectively.
The latter is currently considering whether to start making allocations to private equity.
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