Sovereign-wealth funds, which are among the world’s biggest stock-market players, are unleashing more of their firepower at home, as governments lean on them to reboot pandemic-stricken economies.
The funds made about $12.7 billion in new investments directly into companies and projects in their domestic economies in 2020, more than triple the amount in 2019, according to the International Forum of Sovereign Wealth Funds, or IFSWF. So far this year, sovereign-wealth funds have invested some $4 billion at home, about the same as in all of 2019.
“There is a general shift away from investing in international markets, to demonstrate the value of sovereign-wealth funds to citizens,” Victoria Barbary, the forum’s strategy director said. “Countries planning new sovereign-wealth funds are increasingly focused on investing at home. This is a trend that Covid has accelerated.”
Sovereign-wealth funds manage trillions of dollars on behalf of nations, and where they direct their money can have a major impact on markets.
Their mandates vary. Some invest anywhere, while others can invest only internationally or domestically. Among the funds permitted to invest anywhere, since the coronavirus pandemic struck, domestic investment jumped to 44% of the total, up from 22% in the three years leading up to March 2020, according to research firm Global SWF.
