|
If you are looking for plenty of money, look no
further.
Get in touch with the Chinese
government and with the oil exporters. Between them, they have $15
trillion in cash hoard—the largest pool of money in the hands of
very few individuals.
China alone has $1.6 trillion in
cash as foreign reserves. It was just $146.2 billion in 1998.
The oil exporters were to have
$5.9 trillion in cash, assuming oil at $50 per barrel. But oil is
now doing $130 per barrel. So the petro producers have access to
cash of about $15 trillion.
Petrodollar investors, Asian
central banks, hedge funds, and private equity are the new power
brokers of the century, according to a study by the McKinsey Global
Institute (MGI).
Collectively, the four held $8.4
trillion in assets as of end-2006, triple since 2000. The amount
excludes cross-investments between them. Their money keeps growing.
That is both good—and bad.
Their assets will reach $20.7
trillion by 2012, 70 percent of the size of global pension funds.
But even if oil prices were to
fall, China’s current-account surplus declined, and growth in
hedge funds and private equity slowed, MGI analysis shows that the
assets of these players would nearly double over the next five
years, increasing to as much as $15.2 trillion by 2012.
With the tripling of oil prices
since 2002, petrodollar investors have become the largest of the new
power brokers with an estimated $3.4 trillion to $3.8 trillion in
foreign financial assets at the end of 2006.
Oil exporters account for 60
percent of total petrodollar foreign assets.
The new power brokers bring both
benefits and risks. The relative opacity of these players and a
dearth of hard facts about them have compounded public concern, MGI
cautions.
The $8.4 trillion as of end-2006
is 40 percent of the size of global mutual funds, pension funds, and
insurance companies. They represent some 5 percent of the world’s
$167 trillion of financial assets—a considerable portion, given
that five years ago they were on the fringes of the global financial
system, notes MGI,
Their assets will reach $20.7
trillion by 2012, 70 percent of the size of global pension funds.
But even if oil prices were to fall, China’s current-account
surplus declined, and growth in hedge funds and private equity
slowed, MGI analysis shows that the assets of these players would
nearly double over the next five years, increasing to as much as
$15.2 trillion by 2012. These players are now a permanent feature of
global capital markets.
Their size is likely to double
over the next five years. Far from being a temporary phenomenon, the
new power brokers represent a structural shift in global capital
markets, says MGI.
Among the dollar holders, the
biggest is China’s central bank with $1.1 trillion in reserve
assets. That amount could increase to $1.7 trillion this year.
China’s central bank is the single wealthiest investor in global
financial markets.
The Abu Dhabi Investment
Authority, the largest petrodollar investment fund, and the Bank of
Japan each have estimated assets of up to $875 billion—making them
seventh and eighth among the top ten global investment managers.
Petrodollar investors will have
$5.9 trillion in assets in 2012—with oil at $50 per barrel. But
oil has climbed past $100 per barrel, so the $5.9 trillion could
easily become $12 trillion in four years.
On the other hand, the five
largest hedge funds each have at least $30 billion in assets and
estimated gross investments of up to $100 billion after taking
leverage into account, reckons the MGI.
My good friend, PO Domingo,
passed away Thursday afternoon after a bout with kidney failure. He
had been on dialysis. His body is at Mt. Carmel in Quezon City.
PO was once Southeast Asia’s
best banker, being the president and CEO of the Philippine National
Bank which used to be the largest bank in the region. No. 2 to PNB
then was Bangkok Bank. Today, Bangkok Bank has assets larger than
the combined assets of the whole Philippine commercial banking
system.
Under PO, PNB financed many of
the major industries that are still thriving today. At the time of
his death, PO was the chairman of the University of the East and
chairman of Allied Bank.
He revived UE after the
disastrous buy-in by the Maharishi Group of India and nurtured it to
what it is today, a hugely competitive university that gives its
students the best value for their money in terms of quality
education. He also cleansed UE Hospital of incompetence,
inefficiency and corruption.
Chairman PO, in tandem with
President Rey Maclang, made Allied Bank one of the best managed
banks, No. 11 in assets (P151.45 billion), No. 9 in deposits (P122
billion), No. 10 in loans (P58.3 billion) and in equity (P13.7
billion), and with capital adequacy ratio of 17.74 percent, higher
than the industry average of 12.49 percent and the top ten average
of 16.49 percent. (The minimum is 10 percent).
Well done, my good friend.
Goodbye.
biznewsasia@gmail.com
|
