In a context of geopolitical instability and growing protectionism, and therefore moderation in international investment, sovereign funds are being revalued as a secure financing mechanism for States. This is clear from a report presented today by IE University in collaboration with Icex-Invest in Spain (Ministry of Economy), which concludes that in 2023 these financial mechanisms grew by 14% worldwide and exceeded 13 trillion dollars in assets. under management. It must be remembered that these funds are investment vehicles that some States have to control a portfolio of financial assets, with capital that generally comes from the export of raw materials, such as gas or oil, and investments that in most cases are They materialize in bonds, shares and financial derivatives, although in some cases there are even real estate properties. Related News standard No Banking points to geopolitical risks as the great threat to the sector and the economy Daniel Caballero The entities highlight the good progress of the economy in the short and medium termSpain lacks its own sovereign fund, but we must remember that it is one of the largest recipients of foreign capital in the world, with a ‘stock’ of foreign investment that represents 56% of GDP, being the third country with the highest ratio within the G-20. In fact, our country broke a record in attracting resources from sovereign funds in the period 2023-2024. A total of seven States carried out 13 direct operations on Spanish companies or in projects led by them, with a total volume that reached 7.3 billion euros. According to Icex data, this is the second most significant year in the collection of sovereign flows in the historical series, with an increase of 160% compared to the 2022 figures. «The presence of sovereign funds in our market is a reflection of the attractiveness that Spain has for international capital. It contributes to capitalizing the companies themselves and their operations, favoring both internal growth and large international projects in third markets,” explained Amparo López Senovilla, Secretary of State for Commerce, during the presentation of the report. The good moment of state investmentAs already said, in 2023 there was a substantial increase in sovereign investments globally. According to the Icex report, there were a total of 473 operations, almost 50 more than in the same report in 2023, and a notable growth in the total value of transactions, which reached $211 billion (almost 50% more than in 2023). The editors of the report highlight the good moment that sovereign funds are experiencing by comparing it with the current geopolitical moment, more precisely, with the tensions between the United States and China and the advance of protectionism (Trump has announced a battery of tariffs today) . In a scenario like this, the report reads, this boom “confirms the resilience of long-term investments.” “The funds show extraordinary strength, increasing in number and assets under management in a context of lower international investment and “They prepare for the future by taking positions in industrial sectors, energy and digital infrastructure,” said Javier Capapé, an expert at IE University. However, this increase in protectionism has not happened in vain, since according to Icex it has modified the investments of the States and has made them more prudent and regionalized, concentrating on strategic industrial sectors, digital infrastructure and energy (especially renewables). Norway continues to lead thanks to oil. When it comes to the ranking of sovereign wealth funds, there are no surprises. The Norwegian Government Pension Fund Global remains the largest, approaching the symbolic figure of two billion. Famous is this fund, which is based on the surplus wealth produced by the income derived from the rich oil deposits in that country. China Investment Corporation (CIC) and State Administration of Foreign Exchange (SAFE) remain in second and third place for the second consecutive year; the first, with 1.3 trillion dollars, and the second, with 1.1 trillion. In turn, the 4th, 5th and 6th positions are occupied by funds from the Middle East. Firstly, the Abu Dhabi Investment Authority (estimated at USD 993 billion), the Saudi Arabia Public Investment Fund (PIF), with USD 978 billion, and the Kuwait Investment Authority (KIA), with an updated estimate of USD 969,000. million USD of assets under management.
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