Sovereign Wealth Funds: Reduced Investment Goes to the Safe Harbors Of The West

The gradual erosion of the competitive advantage of emerging countries - especially China - and the pressure on the prices of hydrocarbons determined by the North American shale gas are the factors that have led to a reduction of 35% (from 270 to 175) in the number of operations completed in 2013 by sovereign wealth funds around the world and 15% in their total value (58.4 to 50.1 billion dollars). If it is true that, compared to 2012, the average value of each operation is increased 216.3 to 286.1 million dollars, the figure is placed, however, a decreasing trend in the medium term. In 2008, in fact, the average value was 645.6 million dollars.
The Sovereign Wealth Fund Annual Report 2013 Sovereign Investment Lab (Sil) Baffi Centre at Bocconi shows that the two macroeconomic changes have resulted in both a slowdown in the accumulation of money to invest (most of SWFs belong to governments of developing countries rich in raw materials), and a lower attractiveness of developing countries themselves in the investment location. "We call this the great reallocation process," said Bernardo Bortolotti, director of the Sil, "because of the strong implications it has for geographic areas and industries.

The main beneficiaries are the reallocation of safe assets in developed economies, mainly to Europe, the United States and Australia. "OECD countries have attracted 65% of the investments for the first time since the crisis, while the BRIC countries not only recored a reduction to 21%, but also a violent redistribution, with China collapsing from 4.6 to 0.62 billion dollars of investment from abroad and Russia and India growing fast. Italy, not unlike other years, it is confirmed bringing up the rear in the European ranking with 1.5 billion.In terms of sectors, the reallocation in 2013 sprang from the financial sector, the real estate market and the tourist industry. With 47 transactions for a total value of $ 11 billion, the financial sector remained the most important, but the sum of investments in real estate (22 transactions for a value of $ 10 billion) and in tourist accommodation (6 billion for 16 operations dollars) is higher. For the first time in years the chemicals sector is back in play, while investment in energy are substantial ($ 5.2 billion) and cover the entire value chain.
The report highlights two important phenomena, which could have important consequences in the coming years. The first is the growth of the staff of sovereign wealth funds, which before preferred to rely on structures outside the house and now run an increasing number of transactions from within, even if their value is small to medium. The second is the intensification of cooperation among sovereign wealth funds and between sovereign wealth funds and other investors. In 2013, 53 transactions for a value of $ 16.9 billion were co-investments.