SWF Creation Keeps Pace with Commodities

October 18, 2013 by Loch Adamson

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Source: Sovereign Wealth Center FOR MORE THAN A DECADE, sovereign wealth fund creation has closely tracked commodity prices, surging on the strength of rising global demand for energy and natural resources and faltering during the financial crisis. A confluence of secular demand drivers in emerging markets — including population growth, income expansion and industrialization — helped power this gravity-defying market trend, which began to take hold as early as 1999. By late 2001 commodity prices were soaring. Although the prices of oil and metals peaked in early 2008 and began to plunge later that year with the crisis, those fundamental drivers had a strong, lasting effect on resource-rich countries. Faced with historically high prices and the potential for greater economic volatility, many of those nations chose to act quickly and take advantage of the rare commodities supercycle by creating sovereign wealth funds for a variety of purposes, including…

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