Wednesday, November 28, 2007

Dubai-ous soverign wealth fund investments

David Wilson at Bloomberg provides some anecdotal evidence that sovereign wealth funds may have as much to fear from their investments as the rest of us have to fear of the sovereign source and nature of the investments. He writes,
Sony Corp.'s gains yesterday after a Dubai investment fund disclosed the purchase of a ``substantial'' stake may be short- lived, if the state-run fund's other holdings are any guide.

Sony, the world's second-largest producer of consumer electronics, is among three stocks owned by Dubai International Capital LLC's Global Strategic Equities Fund. HSBC and European Aeronautic, Defence & Space Co., whose Airbus SAS unit is the world's biggest maker of commercial planes, are the others.

HSBC has fallen 13 percent since May 1, when the $2 billion fund made an announcement similar to yesterday's. EADS, based in Paris and Munich, has dropped 11 percent since Global Strategic reported owning a 3.1 percent stake on July 5.

The losses for the Persian Gulf emirate don't stop there. Och-Ziff Capital Management Group LLC, which sold a 9.9 percent stake to Dubai International before going public two weeks ago, has declined 23 percent since its debut. Deutsche Bank AG has fallen 29 percent since the state-owned Dubai International Financial Centre disclosed a 2.2 percent holding on May 16.

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