| What happens when the music stops and sovereign wealth funds start selling? John Plender at Financial Times notes that plunging oil prices are pressuring oil-producing nations and the way they manage surplus cash. Oil-and-gas producers’ sovereign wealth funds held about $4.2 trillion earlier this year, says the FT, citing an estimate from the International Monetary Fund.
Lower-for-longer oil prices means that Arabian Gulf countries, which sat on comfortable budget surpluses when oil as over $100 a barrel, are projected to have deficits in the years ahead. One structural force to think about: “While sovereign wealth funds have significant holdings of illiquid assets such as property, infrastructure and private equity, it is the more liquid investments such as equities and government bonds that will feel the selling pressure if budgets remain under pressure for a sustained period.”..............................................Full Article: Source
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