The Political Significance of the Gulf Cooperation Countries’ Sovereign Wealth Funds’ Investments in Central and Eastern Europe

Although there has been vivid academic debate as to what extent Sovereign Wealth Funds (SWFs) are motivated by political reasons, it is rather clear that countries can use state-owned investment funds as a tool of their foreign policy. Even Barack Obama, during his initial presidential campaign in 2008 commented: “I am obviously concerned if these… sovereign wealth funds are motivated by more than just market consideration and that’s obviously a possibility”. This book looks at SWF activities in Central and Eastern Europe (CEE) to determine the main motives for SWF presence in CEE. Are the potential financial gains the only reason behind their investments? Are SWF activities in the region dangerous for the stability and security of the CEE countries? The book is pioneering analyses of SWFs behaviour in the region, based on empirical data collected from the Sovereign Wealth Fund Institute Transaction Database, arguably the most comprehensive and authoritative resource tracking SWF investment behaviour globally.Rozdział pochodzi z książki: Political Players? Sovereign Wealth Funds’ Investments in Central and Eastern Europe, T. Kamiński (ed.), Wydawnictwo Uniwersytetu Łódzkiego, Łódź 2017.This book was published in frames of project “Political significance of the Sovereign Wealth Funds’ investments in the Central and Eastern Europe”. The project was financed by the Polish National Science Centre (Decision no. DEC-2012/07/B/HS5/03797)

An overview of Sovereign Wealth Funds’ (SWF) investments in Central and Eastern Europe (CEE)

Although there has been vivid academic debate as to what extent Sovereign Wealth Funds (SWFs) are motivated by political reasons, it is rather clear that countries can use state-owned investment funds as a tool of their foreign policy. Even Barack Obama, during his initial presidential campaign in 2008 commented: “I am obviously concerned if these… sovereign wealth funds are motivated by more than just market consideration and that’s obviously a possibility”. This book looks at SWF activities in Central and Eastern Europe (CEE) to determine the main motives for SWF presence in CEE. Are the potential financial gains the only reason behind their investments? Are SWF activities in the region dangerous for the stability and security of the CEE countries? The book is pioneering analyses of SWFs behaviour in the region, based on empirical data collected from the Sovereign Wealth Fund Institute Transaction Database, arguably the most comprehensive and authoritative resource tracking SWF investment behaviour globally.Rozdział pochodzi z książki: Political Players? Sovereign Wealth Funds’ Investments in Central and Eastern Europe, T. Kamiński (ed.), Wydawnictwo Uniwersytetu Łódzkiego, Łódź 2017.This chapter presents an overview of the investments made by Sovereign Wealth Funds (SWF) in Central and Eastern Europe (CEE), defined in this paper as the region encompassing the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia. The following analysis considers all investments made by the funds as of the end of July 2014 and is based on data from the Sovereign Wealth Fund Institute Transaction Database, the Sovereign Wealth Center and government official information. The aim of the chapter is to make an introduction to the following parts of this paper and to allow to estimate the potential political risks stemming from SWF investments.This book was published in frames of project “Political significance of the Sovereign Wealth Funds’ investments in the Central and Eastern Europe”. The project was financed by the Polish National Science Centre (Decision no. DEC-2012/07/B/HS5/03797)

Sovereign Wealth Funds in Central and Eastern Europe: Scope and Methods of Financial Penetration

The Central and Eastern European (CEE) capital markets (of Poland, Lithuania, Latvia, Estonia, the Czech Republic, Slovakia, Hungary, Ukraine and, to a limited extent, Belarus) are gradually evolving towards increased breadth (diversity) and depth (liquidity), however, they are still exposed to considerable cross-country volatility and interdependence spill-overs – especially in times of capital flight to more established asset classes (“safe havens”). Sovereign Wealth Funds (SWFs) have widely been censured for their undesirable political interference and chronic operational opacity. This paper demonstrates that in CEE, contrary to widespread perceptions attributable to developed markets, SWFs can act as natural and powerful risk mitigators (contributing to a more stable capital base and reduced systemic volatility). Such a proposition is premised on several factors specific to SWFs oriented to CEE. They comprise: strategic long-termism and patience in overcoming interim pricing deficiencies, commitments to elements of a broadly interpreted infrastructure, and absence of overt conflicts of interest with the CEE host economies. The paper, besides reviewing the utilitarianism of SWFs in the CEE’s risk mitigation context, highlights regulatory and technical barriers to more SWF funding for CEE. It also recommends policy measures to the CEE economies aimed at luring more host-friendly SWF investment into the region

How the rise of East Asian Sovereign Wealth Funds affected the European Union?

The processes in East and South Asian became a peculiar subject for global community of international relations in the field. The presented volume is a collection of papers dealing with the processes of regionalization in East and South Asia. We collected papers from different academic unit both from Europe and Asia. Taking regionalization as a core subject of the volume the readers will discover the complexity of ongoing processes in East and South Asia. We present collection of papers from a very different perspectives starting from the theoretical debates, through economic dimensions of integration to political and military scope of regionalization in East and South Asia. The whole volume presents the diversity of understanding among international relations scholars community. By shaping the diverse view we can possess the better and in depth understanding of East Asia.Europe remains a tempting destination for East Asian SWFs. Almost a third of their investments have been committed to EU countries. Nearly all of the assets have been invested by Chinese and Singaporean funds. The investment policy of East Asian SWFs has significantly evolved over the past few years. Their financial commitments between 2008 and 2014 were carried out in a broader range of sectors than before, which leads us to believe that they endeavor to diversify their European portfolios in a similar way to other SWFs. However, in terms of target sectors, they are much more exposed to infrastructure and much less to industrials. Stark contrasts are noticeable with regard to the exposure to the UK market. For East Asian SWFs, the UK is definitely the top destination, with 64% of all assets allocated to this economy. For other SWFs, notably from GCC states, it is also the most significant market, but they have held more diversified portfolios. The differences can be attributed to the strength of the traditional bonds between this top European financial center and both respective areas. Despite the widespread belief that SWFs routinely espouse politically-biased agendas, evidence supporting hostile activities by Asian SWFs is scant. Investment diversification and behavioral patterns similar to other market players help downplay concerns over the motifs of Asian investments in Europe (particularly heightened in times of economic crises in the Eurozone (Meunier 2011, 2014). Comparisons of East Asian SWF investments with other alternative asset managers (e.g. private equity funds and exchange traded products) demonstrate investor specific differences rather than a particular bias in the investment activity of such SWFs. Our research on Asian SWFs thus generally supports the claim (Mezzcapo 2009) that SWFs can be considered beneficial for target countries as they tend to be relatively large, highly liquid, long-term orientated, not significantly leveraged, and with a substantial appetite for risk-taking, while being less affected by market conditions (than other financial institutions). Thanks to these features East Asian SWFs should be perceived as market stabilizers rather than sources of market volatility