Singapore's GIC Calls For Sovereign Wealth Fund Disclosure
SINGAPORE -(Dow Jones)- Sovereign wealth funds ought to improve
their transparency while countries in which they invest shouldn't
impede their activities, the head of the Government Investment
Corporation of Singapore said Monday.
GIC Deputy Chairman and Executive Director Tony Tan Keng Yam also
said all participants in global financial markets should be treated
equally and that the state-backed funds shouldn't be discriminated
against.
The remarks came as the GIC said it will own around 9% of Swiss
bank UBS AG ( UBS) following a CHF11 billion investment in the
Zurich-based financial giant. The GIC's investment in UBS is long
term and the Singapore sovereign wealth fund isn't looking for
management control, Tan said at a press conference.
"Recipient countries should not adopt policies that inhibit
cross-border investments. Reciprocity in keeping markets open for
foreign investments would be desirable," he said.
"Any guidelines for SWFs should encourage SWFs to operate according
to commercial principles with a long-term orientation, free from
political motivations," Tan added.
The comments suggest that Singapore, which is among a growing
number of countries that operate sovereign wealth funds, is eager
to head off any potential public backlash that may threaten its
investment opportunities overseas. They also suggest that the small
Asian city-state is keen to have its voice heard as financial
authorities from the U.S., Europe, Japan and elsewhere try to
formulate policies on how to deal with the state-backed
funds.
Moves are afoot in the Group of Seven leading industrial nations to
address the increasing influence of sovereign wealth funds, whose
financial firepower Merrill Lynch estimates could soar to $7.9
trillion by 2011 from $1.9 trillion currently. G7 officials are
concerned the funds may become a source of volatility in financial
markets or cause national security problems if they seek stakes in
companies that are sensitive from a national security
standpoint.
"All players in the global financial markets should be treated
equally," Tan said, adding that sovereign wealth funds should be
perceived as a stabilizing force in financial markets because of
their focus on well-diversified portfolios, long-term stance and
"virtually no leverage."
Tan said Singapore "will participate actively" to create a set of
principles and best practices for SWFs, and that the "GIC believes
that it can contribute in a positive way to the framework for
greater disclosure."
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Definitely something worth looking at.
