Research On The Sovereign Wealth Funds And Its Impact On Global Economy

In recent years, while the investment activity of Sovereign Wealth Funds(SWF) have become increasingly frequent in the international market, people began to look into these national investment agencies that has existed for such a long time but always been neglected. SWF is considered as an unstable factor to the world financial markets because of its huge size and little transparency. Many reports predict that sovereignty wealth Fund will soon become one of the important participants in the international capital market, bringing huge impact to the world economy. At present, there is no generally accepted definition for SWF and academic research about it is very limited.This article is divided into four chapters. Chapter I (Introduction) summarizes the background of topic, reviews the relevant literature of domestic and foreign scholars on this issue, and briefly describes the structure of the article, sums up innovation points and shortcomings of the article.Chapter II is a research on the nature of SWF. The article makes a preliminary conclusion on the current phenomenon of SWFs and gives the definition of SWF as a class of state-owned investment funds with long-term objectives, consisting of various financial assets such as equities and bonds, funded by the foreign exchange reserves,fiscal surplus and income of recourse exporting.According to various sources, Section I divide SWF into three categories: foreign exchange reserve funds, natural resources funds and international aid funds. SWF is also divided into six groups according to different functions: stabilization fund, sterilization funds, savings funds, prevention funds, state investment corporation and the development funds. SWF is compared with foreign exchange reserves and other relevant concepts to clarify its definition.Section II states the history of SWF in three parts, the birth of the SWFs, the first golden era and the rise of SWF. Then, the article compares the scale of the SWF with other investment institutions, concluding that the SWFs are big enough to attract a high degree of attention. Then, the article points out that the SWF will maintain a rapid growth on its size and number.Section III introduces SWF's investment strategy and governance structure, with emphasis on comparison of the NBIM and GIC in the organizational structure, investment strategy, the external managers, risk control and corporate governance.Chapter III analyzes the influences on the world financial market brought by the rise of the SWFs. The influences and some thoughts about economic globalization are also introduced. The article maintains that the SWFs mitigate the partial liquidity lack triggered by the subprime lending crisis , play a positive role in the building of global financial system, changed the global financial market investors composition and will affect the prices of all kinds of assets, as well as bring risks to the world financial system.The article also believes that under the background of economic globalization, the rise of the SWFs plays a positive role to adjust the global economic imbalances. Then, it analyses the transparency of SWF and the financial protectionism, and maintains the view that a standard code of conduct will help reduce protectionism. Finally, the article introduces a number of thoughts brought by SWF. Whether the economic forces have started to transfer from the private sector to the public sector? Dose it imply the recovery of the capitalist countries? Such topics need further discussions.Chapter IV analyses the status of China's SWF. Based on this, the article suggests that China should be actively involved in the formulation of the code of conduct and actively reform China Investment Corporation.