Comments on: Is it time for another Australian sovereign wealth fund?

By: Greg Atkinson

Greg Atkinson — Thu, 23 Apr 2009 00:40:53 +0000

Thanks Pete..that was an interesting article. China is hard to work out because there are a lot of problem just under the surface that could really cause problems. For example I read one report that said the health costs caused by pollution in many major Chinese cities will be crippling in 20-30 years time..so who knows what the true story is?

By: Pete

Pete — Mon, 13 Apr 2009 13:51:45 +0000

Good points guys. I did understand the basic premise of the Future Fund in the first place, but I did not like how it was invested, and the fact that we used the USA to invest it for us.

On a semi related note, here is a very interesting article about China’s future economic prospects. I found it a good read:
http://www.theatlantic.com/doc/200904/chinese-innovation
(note that it is spread over three pages)

By: Greg Atkinson

Greg Atkinson — Fri, 10 Apr 2009 12:53:51 +0000

Pete, I would not use the SWF to bailout companies as that would not be included in the mandate given to the investment managers. But I do see sense in having a fund able to snap up stakes in companies in times like these rather than these assets being snapped up by another nation’s SWF. In any case, I would much prefer governments put money in a SWF than throw cash around via tax payer rebates, which is in effect nothing more than vote buying, no matter what side of politics does it.

By: Senator13

Senator13 — Fri, 10 Apr 2009 10:43:16 +0000

As at 31 December 2008 the Future Fund was valued at $59.62 billion. This included $7.65 billion worth of Telstra.

It has a bit over $24 billion in cash and only $4.4 billion in Australian equities.

It seems to be performing fairly well given the global conditions.

I think the Future Fund is a good idea. I think it is a smart investment of tax payers money to invest into a fund to finance future liabilities. I would have been a big fan if they created another SWF instead of just cash hand outs. Good article.

By: Pete

Pete — Fri, 10 Apr 2009 02:29:03 +0000

Thanks Susan, it’s nice to know people read this

My question about this article is – do we have any idea of what the size of the future fund is?

It was being managed by US fund managers…(not Australian ones) and undoubtedly bought US shares too (I assume). The way markets have gone, perhaps that $60B is now more like $30B or less?

Then we might need to consider: what impact would “selling” of all the Telstra shares have on the economy? Would Telstra suffer? Perhaps the Gov. would need to leave that bit of the fund be. But then the total amount we have is reduced…perhaps only $20B or so?

It soon becomes a bit of a joke I think, but again I am just speculating here. Personally I am against Sovereign Wealth Funds (SWFs) used to buy or bailout local businesses UNLESS it is to directly counter an offer from an overseas purchaser.

SWFs should be used to purchase overseas assets and to generate leverage for Australia in these international markets (I don’t mean leverage as credit).

This is what China is doing, and it’s fantastic for them.

By: Susan Kishner

Susan Kishner — Thu, 09 Apr 2009 06:47:21 +0000

You know, I have to tell you, I really enjoy this blog and the insight from everyone who participates. I find it to be refreshing and very informative. I wish there were more blogs like it. Anyway, I felt it was about time I posted, I?ve spent most of my time here just lurking and reading, but today for some reason I just felt compelled to say this.