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Sovereign Wealth Funds: $7 Trillion Reasons to Stay Invested
In February, I wrote that the decline in stocks was just about over. Why?
There was more money available to buy shares than at any time in almost two decades. The $8.85 trillion held in cash, bank deposits and money market funds was equal to 74% of the market value of U.S. companies, the highest ratio since 1990, according to the Federal Reserve.
What happened in the past when cash reached these levels?
- In September 1974, cash on hand reached $604.5 billion, representing a record 1.21 times the U.S. stock market’s capitalization. That preceded a 31% gain in equities between October 1974 and…
Sovereign Wealth Funds Reducing Exposure to U.S. Dollar
State-run sovereign wealth funds are diversifying away from the U.S. dollar, as well as dollar denominated assets, at an unheralded pace, as the greenback’s protracted declined undermines the credibility of U.S. policymakers.
The Financial Times reported yesterday (Thursday) that one large, unnamed Gulf fund has cut its dollar-denominated holdings from more than 80% a year ago to less than 60%. Also, China’s State Administration of Foreign Exchange (SAFE) has been actively seeking deals with private equity firms in Europe as part of a specific strategy to reduce its dollar holdings.
A shift in policy at China’s SAFE is particularly significant because it holds…
18Jul2008 | Money Morning | 1 comment | Continued
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