As Western financial sectors reeled during 2007 and 2008, Asian and Middle Eastern sovereign wealth funds (SWFs) offered some succor, administering exotic medicine to banks poisoned by subprime toxins. These White Knights cast a dark shadow, however, as questions -- and fears -- were raised about the political influence that, for instance, a Chinese government presence on the board of Barclays Bank might represent. The focus has shifted recently. Plummeting oil prices and declining demand for imports by contracting U.S, European and Japanese markets undercut the vast revenue base the SWFs were drawing upon. Now SWFs are writing off untold billions in debt and meeting liquidity needs in domestic markets, while seeking recapitalization from revenue-hungry governments. They might no longer be able or willing to invest in Western financial institutions.
Sovereign Wealth Funds to Ride Again?
