Sovereign investors better able to manage oil-related issues: report

SOVEREIGN wealth funds are now in a stronger position to manage funding concerns linked to falling oil prices than they were before the 2008 global financial crisis, said an Invesco report on Monday.

This is partly due to a greater recognition of liquidity objectives across the board, and a better risk management and governance framework.

These are according to findings from the third annual Invesco Global Sovereign Asset Management Study, which was conducted among more than 50 individual sovereign investors across the globe - representing US$7.09 trillion of assets.

Still, not all sovereign investors feel equally exposed to the effects of falling oil prices.

North American sovereign investors were the most frequent to say that they expected new funding to be negatively affected in the short term, while sovereigns in the Middle East viewed themselves as being the least affected from a funding perspective.

"For the rest for the world ... 42 per cent of those sovereigns with high oil exposure expect a decrease in funding relative to last year, which shows that the link between sovereign funding and oil is global and not just an issue for oil-driven sovereign investors in emerging markets," said the Invesco report.