A summit that analyses the growth of Sovereign Wealth Funds (SWF) and their effect on the global financial markets was opened here yesterday.

The two-day event entitled QPC's GCC Institutional Investments Summit was attended by renowned speakers from the International Monetary Fund (IMF) who discussed the body's regulations and their impact on large institutional investors.

Dubai International Financial Centre Authority (DIFCA) chief economist Dr Nasser Al Saidi opened the conference as he emphasised the need to focus on the international investment market.

"The financial crisis that has affected the developed countries worldwide has led to an unexpected rise in the prominence of the emerging economies, where resilience, based on strong economic fundamentals, liquidity and build-up of financial assets are proving to be a major attraction for the big institutional investors and wealth managers," said Dr Al Saidi.

Bank of New York Mellon managing director for Mena, Hani Kablawi highlighted a well-documented migration of capital eastwards, particularly with the SWF and central banks of Asia and the Middle East.

Kablawi was optimistic that Asia's export engine would continue, noting that oil market dynamics suggest an oil price well above the Middle East's 'budgetary balance' oil price of $40-something for the long haul.

"SWF came to the rescue, and that has helped improve their image and reputation. We may not have seen the end of the losses in the US and European financial sector but SWFs continue to look for bargains," Kablawi explained.

He cited key beneficiaries like Citi and Merrill which took in $19.9 billion and $11 billion in the last few months alone.

"In that respect, the SWF have done the American and European taxpayer’s a big favour and we should continue to remind them these markets are open for investment, to ensure their capital does not head elsewhere," Kablawi said.

Also present was Norway's ministry of finance asset management director general Martin Skancke who will present his government’s Pension Fund to regional business leaders.

Skancke will also discuss the role of SWFs in financial markets.

"SWFs have a strong risk-bearing capacity and an ability to accommodate short-term volatility. They may therefore act as a stabilising factor in financial markets by dampening asset price volatility and lowering liquidity risk premia," Skancke pointed out.

“I am particularly pleased to have been asked to address the questions of transparency, governance and ethical guidelines. These are very timely questions, reflecting the current international debate both on sovereign investments and investors' responsibilities.” -TradeArabia News Service