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developing countries' sovereign wealth funds must be treated fairly

Sunday, January 6, 2008

BEIJING (XFN-ASIA) - China has urged that sovereign wealth funds from developing countries be treated objectively and fairly as they pursue deals, China Business News reported, citing a senior foreign exchange regulator.

Wei Benhua, deputy director of the State Administration of Foreign Exchange, said that some developed countries, which he did not identify, have reacted strongly to the investment activities of various sovereign wealth funds and have called for controls on these investments.

The newly-established China Investment Corp (CIC) has also triggered some concern in international markets since starting operations, leading some countries to complain about the alleged threat from China's acquisitions.

Last month, the CIC reached an agreement to invest 5 bln usd into Morgan Stanley, following a 3 bln usd purchase of a stake in Blackstone Group ahead of that company's initial public offering in May.

Sovereign wealth funds can help countries allocate resources optimally, Wei said, adding that their long-term approach to investment will not destabilize markets.

Just like other equity funds, sovereign wealth funds are market-oriented, and must not be discriminated against, and neither should such funds from developing countries be given less preference relative to those from developed countries, he said.

Wei said a balance must be achieved in disclosure from sovereign wealth funds, with too-rapid increases in transparency having the potential to make markets more volatile.

Posted by MOHAMED SAID at 11:39 PM  


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