SWF Radar Guidelines

The Economic Observer Online presents various opinions from around the world on the IMF-IWG GAPP guidelines for SWFs.

It is worth noting the mention that is made of the other Chinese sovereign investors in the context of a discussion of the IMF-IWG:

Though CIC had attracted most of the global scrutiny, Chinese government investments were made through various entities like the State Administration of Foreign Exchange (SAFE), the China Development Bank, and the National Social Security Fund, just to name a few.

Zhang [Ming of the Chinese Academy of Social Sciences, a major Chinese government think tank,] said there were some rivalries between these entities, and the government should coordinate their overseas investment behavior and map out a holistic strategy to ensure they “cooperate while competing”.

The International Financial Law Review writes that, “The IMF has persuaded 26 sovereign wealth funds (SWFs) to agree to voluntary transparency guidelines. But doubts remain over the impact this will have.”

The National writes that, “The guidelines drafted by the IMF and IWG are voluntary and there is no guarantee that all funds will sign them. But with Abu Dhabi, whose fund is by far the largest, behind the document, it is likely that the majority will fall in step. Those that do not adhere to the new guidelines may see their attempts at future investment blocked; a country would have legitimate grounds for preventing the purchase of strategic commercial assets by any fund not committed to the agreed principles.”

IMF Survey writes that, “The proposed voluntary principles and practices for sovereign wealth funds, along with an OECD investment code on behalf of recipient countries, will help create a global environment that enables more effective cross-border investing, according to John Lipsky, IMF First Deputy Managing Director.”

ChinaStakes.com reports that, “China Investment Corporation (CIC), China's sovereign wealth fund (SWF), which originally refused to accept a code of best practices being formulated by the US and other western countries for SWFs, and even labeled it ‘stupid,’ has decided to accept a new, and voluntary, code of common conduct along with the world's other major SWFs.”

Daniel Drezner writes on “those new punk SWFs” that, “One would think a voluntary code of conduct would not matter so much, but compliance with principles on transparency and governance are pretty easy to observe and monitor. This, combined with the fact that the biggest recipient countries and the largest SWFs have a big incentive for the GAPP [Generally Accepted Principles and Practices for Sovereign Wealth Funds] to work, leads me to think that this [preliminary agreement] will mean something.”

Here is the IMF-IWG press release (as yet no permalink) with which the preliminary agreement was announced.

Thomson Reuters reports that, “Global sovereign wealth funds said on Tuesday they had reached a preliminary agreement on a set of voluntary principles to guide their investment practices and to calm fears about their motives. The International Working Group of Sovereign Wealth Funds, or IWG, which consists of 26 of the wealthy state-owned funds, said it would present the guidelines to the International Monetary Fund’s policy-setting committee on October 11.”

The report adds that, “David Murray, board chairman of Australia’s Future Fund, said the wealth funds also agreed to consider creating a standing group of wealth funds, which would facilitate further discussion among the funds, and recipient countries, and the private sector.”

As for the “Generally Accepted Principles and Practices (GAPP)” themselves (not to be confused with GAAP), “The guidelines include a set of 24 principles that cover legal, institutional, governance, investment policies and risk management structures of the funds, Murray said.”

Here’s the FT’s take.

Here’s the WSJ’s take.

And here’s the SCMP’s take.

Thomson Reuters reports that, “The International Monetary Fund said on Monday it was optimistic that ‘significant progress’ was being made toward an understanding on investment practice guidelines by rich sovereign wealth funds, but some state-owned funds remain wary.”

The IMF Survey writes that, “The International Working Group of Sovereign Wealth Funds (IWG)-comprising 26 member countries-will meet for the third time on September 1-2 in Santiago, Chile, to agree on a common set of voluntary principles and practices intended to guide investment practices by sovereign wealth funds (SWFs).”

It adds that, “The meeting aims to reach an understanding on the Generally Accepted Principles and Practices (GAPP) on SWFs in advance of the IMF-World Bank Annual Meetings on October 10-13. The GAPP is expected to be presented to a meeting of the IMF’s policy-guiding body, the International Monetary and Financial Committee (IMFC), on October 11 when it convenes during the Annual Meetings in Washington.”

Thomson Reuters reports that, “The world’s sovereign funds, which control an estimated $3 trillion in assets, are on track to agree on a code of conduct [the Generally Accepted Principles and Practices (GAPP)] by October, but the rules won’t be binding, an International Monetary Fund working group [the International Working Group of Sovereign Wealth Funds (IWG)] said on Thursday.”