Preference Regional Investment Of Sovereign Wealth Funds

Since the beginning21th century, the number and size of global Sovereign Wealth Funds grows rapidly, has become a global market investments participants which can’t be ignored. As China’s Sovereign Wealth Fund was established short term, the investment of which is inexperience, combined with its inception facing the global financial crisis, making the growth of China’s Sovereign Wealth Fund is particularly bumpy. In this context, it hard for China’s Sovereign Wealth Fund to make appropriate investment decisions to increase revenue and reduce risks. At this time, learning the current mainstream Sovereign Wealth Funds investment patterns is very necessary. Based on this, the paper studies the current global Sovereign Wealth Funds regional investment distribution, investment preferences from the national or regional level and influencing factors and proposes some recommendations for China’s Sovereign Wealth Fund regional investment decisions.Firstly, defines the concepts related to Sovereign Wealth Funds, analyzes Sovereign Wealth Funds current invest situation and elaborates some major problems current Sovereign Wealth Funds investments faced.Secondly, this paper constructs game model to research host country foreign policy’s effect on Sovereign Wealth Funds regional investment preferences, as well as the transparency of Sovereign Wealth Funds’ decisive role on equilibrium investment. The conclusions show that when Sovereign Wealth Funds take voluntary disclosure of information mechanism, Sovereign Wealth Funds regional investment preference is associated with host country’s foreign policy. And equilibrium investment amount first rising and then falling with preferential policies of host country and Sovereign Wealth Funds’ transparency increase. Equilibrium investment amount will be less than the host country investment demand gap. Sovereign Wealth Funds’transparency is positively correlated with the host country’s foreign policy.Furthermore, based on the date of more than2,000global Sovereign Wealth Funds overseas investment projects on2009-2011, this paper analyzes Sovereign Wealth Funds investment spatial distribution characteristics, measures the spatial correlation of their investment distribution by the use of spatial econometric regression, then Norway, for example, to explore the investment path selection and general analyze the path causes based on the location choice influencing factors. The conclusions show that①host country’s GDP and the closeness of the bilateral trade are related to Sovereign Wealth Funds regional investment preferences.②Sovereign Wealth Funds investment spatial cluster phenomenon exists, which can circumvent the risks of information asymmetry, reduce the cost of developing new markets, and play technology management space spillover effect.③Both investment path,"extensive distribution, local spread" and "local distribution, spread widely", contribute to guide the investment practice of China’s Sovereign Wealth Fund.Finally, based on the conclusions, proposes recommendations for China’s Sovereign Wealth Fund regional investment.