Reuters: Potential Global Rebalancing Factors – SWFs to Expand Footprint in the Emerging Markets via Strategic Cooperation

Mirtchev, A. (2009, August 18). Potential Global Rebalancing Factors – SWFs to Expand Footprint in the Emerging Markets via Strategic Cooperation. Reuters.

ReutersDr. Alexander Mirtchev, President of Krull Corp., discussed the post-crisis trend of active cooperation between sovereign wealth funds in investment projects, reflecting the shifting balance of geo-economic power throughout a wider spectrum of actors. He notes that such SWF alliances point to their growing market confidence and greater ideological acceptance both in the emerging markets and the developed economies. According to Mirtchev, sovereign investment partnerships are not merely another risk mitigation phenomenon stemming from increased risk aversion among investors but rather a healthy search for synergistic opportunities benefiting economic development in regions where such alliances jumpstart operations. Furthermore, it is an offshoot of the rebalancing of economic priorities of emerging markets in particular, which seek new patterns of investment that would combine returns with enhanced risk mitigation. Ultimately, the rising investment appetite by SWFs could represent a useful catalyst for economic recovery in regions and markets that may otherwise have been slow to rebound.  Moreover, the increased willingness of investors to share the benefits from merger and acquisition activities in order to introduce elements of comparatively independent supplementary financing mechanisms in their transactions is another sign of their growing maturity. Put in perspective, this trend may set the stage for the development of evolved forms of financing of investment transactions that could integrate as an additional layer of the global financial system.