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Singapore sovereign fund less threatening analysts

Taipei Times
17 December 2007

Singapore sovereign fund ‘less threatening’: analysts

Synopsis

A recent UBS deal has brought to light the importance of SWFs in global markets and the wariness with which they are sometimes regarded. On page 11 of the Taipei Times, analysts hold the view that Singaporean capital is potentially less threatening than other government-linked funding sources.

In the latest major overseas investment by a sovereign wealth fund, the Government of Singapore Investment Corp (GIC) said last week that it would inject 11 billion Swiss francs (US$9.74 billion) into UBS, Switzerland’s largest bank. The rise of SWFs has led to concerns over a lack of transparency and has raised national security or broader strategic concerns in recipient countries, the AFP Singapore report said.

Despite the row with Thailand, Leon Perera, group managing director of Spire Research and Consulting, said “the more interesting story” is how the developed countries will respond to SWFs.

The Organization for Economic Cooperation and Development said recently that many SWFs are viewed as “opaque and secretive … [and] at odds with standards applied in global financial markets.”

It called for codes of conduct for the funds.

“I think there is clearly a creeping backlash against sovereign wealth funds in developed countries,” said Perera.

When Dubai Ports World of the UAE last year took over British-based Peninsular and Oriental Steam Navigation Co, US lawmakers fiercely blocked a US component of the deal, citing national security fears.

Perera said the potential for such political tensions are probably less when Singaporean funds are involved.

“I think Singapore may be seen to be a more safe… provider of capital,” he said.

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