Saturday, July 19, 2008

Sovereign Funds Shift to Asia

From Reuters; Sovereign wealth funds, controlling over $3 trillion in assets, are likely to turn to investments in Asia, a move likely to push the U.S. dollar lower against Asian currencies including the Japanese yen.

"This is not a euro-dollar story. It's going to be a developed world versus developing world story," said Stephen Jen, who heads up Morgan Stanley's global FX strategy.

Authorities in Kuwait this week said the state's sovereign wealth fund, which manages its massive petro-dollar assets, will not buy future Fannie or Freddie debt, opting instead to boost investments in stocks, bonds, and real estate in China, India and Japan.

A Chinese think-tank also said the travails at the two U.S. government-sponsored enterprises add urgency to China's goal of diversifying its $1.8 trillion stockpile of currency reserves.