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2010 Global Sovereign Brands Study: attitudes to sovereign wealth funds and the countries that host them
15th June 2010
$3.5 trillion
SOVEREIGN WEALTH AND THE COMPETITIVE LANDSCAPE
Q. How familiar are you with the following as sources of investment? (% Very/somewhat familiar)
Base: PSB Sovereign Wealth Study (among all) 1064
Sovereign Wealth Funds have the lowest familiarity...
... but are viewed more favourably than hedge funds while trailing rest of field
Q. In general how favourable are you to the following sources of investment? (% Very favourable)
Base: PSB Sovereign Wealth Study (among all) 1064
Familiarity/Favourability: a clear correlation
r2*-=0.8861
Base: PSB Sovereign Wealth Study (among all) 1064
Low familiarity and favourability accompanied by lower trust levels
Q. How trustworthy do you consider the following sources of investment to be?(Very/somewhat trustworthy)
Base: PSB Sovereign Wealth Study (among all) 1064
The underlying level of concern with SWFs versus other investments are significant
Q. How concerned, if at all, would you be if a sovereign wealth fund were to invest in your country compared with other forms of finance?
50
26 30 33
47
97
Base: PSB Sovereign Wealth Study (among all) 1064
5460
Key concern – political motivation
Q. When compared with other sources of investment, to what extent, if any, are you concerned about the motives of sovereign wealth funds from the following countries, for example, that they might be trying to assert political influence ? (Very/somewhat concerned)
Key concern – political motivationQ. When compared with other sources of investment, to what extent, if any, are you concerned about the motives of sovereign wealth funds from the following countries, for example, that they might be trying to assert political influence ? (Very/somewhat concerned)
All UK US Egypt Brazil Germany China IndiaRussia 83 93 88 50 76 84 92 74
China 76 85 88 17 68 81 N/A 84
Libya 73 86 91 16 79 85 53 70
Kazakhstan 71 70 71 41 74 72 72 77
Algeria 68 73 82 68 61 70 63 63
Nigeria 68 77 84 48 57 73 65 62
Botswana 61 54 74 51 70 55 57 56
Kuwait 60 44 66 4 62 53 84 77
Qatar 58 53 75 4 53 49 74 61
Malaysia 56 47 61 10 56 51 77 64
Brunei Darussalam
54 44 61 43 67 53 45 68
Abu Dhabi 53 44 70 13 68 33 61 64
Mexico 52 40 55 40 58 32 84 59
Oman 52 42 67 12 56 46 60 57
Hong Kong 51 26 54 19 64 47 N/A 50
Bahrain 51 42 63 12 63 45 62 47
Dubai 50 43 70 8 48 39 73 53
Singapore 48 18 48 45 65 32 86 44
Norway 39 11 20 36 66 8 89 44
THE ECONOMIC DOWNTURN CREATES MORE INTEREST IN SWFs
11
Elites are more favourable towards SWFs since the global downturn
12
Q. How, if at all, has your favourability towards sovereign wealth funds changed since the global downturn?
Impact of downturn All UK US Egypt Brazil Germany China India
Much more favourable towards sovereign wealth funds 17 9 9 11 39 4 22 22
Somewhat more favourable towards sovereign wealth funds 34 30 20 27 41 24 56 41
No more or less favourable toward sovereign wealth funds 36 43 44 41 19 61 17 26
Somewhat less favourable towards sovereign wealth funds 11 15 23 15 0 9 5 9
Much less favourable towards sovereign wealth funds 3 3 5 6 1 2 1 1
Base: PSB Sovereign Wealth Study (among all) 1064
Favourability particularly high in Brazil, India and China...
13
Q. How, if at all, has your favourability towards sovereign wealth funds changed since the global downturn?
Impact of downturn All UK US Egypt Brazil Germany China India
Much more favourable towards sovereign wealth funds 17 9 9 11 39 4 22 22
Somewhat more favourable towards sovereign wealth funds 34 30 20 27 41 24 56 41
No more or less favourable toward sovereign wealth funds 36 43 44 41 19 61 17 26
Somewhat less favourable towards sovereign wealth funds 11 15 23 15 0 9 5 9
Much less favourable towards sovereign wealth funds 3 3 5 6 1 2 1 1
Base: PSB Sovereign Wealth Study (among all) 1064
... and attitudes look set to become more favourable as the global economy improves
14
Q. Are you likely to become more or less favourable toward sovereign wealth funds as the global economy improves?
Impact of recovery All UK US Egypt Brazil Germany China India
Much more favourable 18 5 9 24 45 1 26 16
Somewhat more favourable 40 34 39 28 46 23 56 53
No change 35 53 44 32 8 72 15 20
Somewhat less favourable 7 7 7 15 1 4 2 10
Much less favourable 0 1 1 0 0 0 1 0
Base: PSB Sovereign Wealth Study (among all) 1064
THE OPPORTUNITY FOR SWFS IN THE FUTURE
Q. Would you say most sovereign wealth funds tend to invest more for the long term or short term?
Base: PSB Sovereign Wealth Study (among all) 1064
Q. Based on your impressions, to what extent do you agree or disagree that the investment activities of the sources of investment below contribute more to market turmoil and uncertainty than other forms of investment? (Strongly/somewhat agree)
• Sovereign Wealth is not seen as responsible for market turmoil compared to other forms of investment
• 68% of Elites think Sovereign Wealth funds invest for the long term
Investment form %
Sovereign Wealth 40
Investment banks 65
Hedge funds 65
SWFs are viewed among least likely to have contributed to market turmoil
Q. How reliable do you consider the following sources of investment compared to other sources of investment? (Much more reliable)
Base: PSB Sovereign Wealth Study (among all) 1064
SWFs are seen as more reliable than private equity and hedge funds
SWFs have high approval to invest in a range of industries – excluding defence
Q. To what extent do you approve or disapprove of sovereign wealth funds investing in the following sectors of your country’s economy?
% Strongly/somewhat approve
Base: PSB Sovereign Wealth Study (among all) 1064
SWF IMAGE IS TIED TO HOST COUNTRY IMAGE
19
Country reputation is key in shaping perceptions of SWFs
Q. In your opinion, how important is the reputation of the country of origin of a sovereign wealth fund in terms of how positively or negatively you might view that sovereign wealth fund? (% Very important)
• 98% say country of origin reputation is very / somewhat important in driving SWF reputation
Base: PSB Sovereign Wealth Study (among all) 1064
Country reputation is highly correlated to perceptions of SWFs
% saying very important in driving positive perception of SWF
Base: PSB Sovereign Wealth Study (among all) 1064
% s
ayin
g ve
ry im
port
ant i
n dr
ivin
g po
sitiv
e pe
rcep
tion
of c
ount
ry
r2-=0.95
SWF RANKINGS
22
Approval of SWFs investment from different countries
Q. To what extent do you approve or disapprove of sovereign wealth funds from the following countries investing in your country?
Base: PSB Sovereign Wealth Study (among all) 1064
Cross country approval ratings of SWFs
24
Q: To what extent do you approve or disapprove of sovereign wealth funds from the following countries investing in your country? (% strongly/somewhat approve)
Base: PSB Sovereign (each respondent sees 9 of 19) total 500 approx. Chinese respondents were not asked about China.
Sources of investment All UK Germany US India Egypt Brazil China
Norway 88 97 100 97 79 50 100 96Singapore 83 95 85 81 100 43 84 97Hong Kong 83 86 72 79 90 71 83 95
Kuwait 74 74 74 57 59 89 75 85Dubai 73 55 73 52 78 96 86 66
Abu Dhabi 72 81 74 51 72 100 67 61Malaysia 69 64 57 54 73 84 75 77Bahrain 69 67 74 46 60 91 76 71
Qatar 63 57 64 42 49 90 63 75Russia 62 45 47 49 70 60 78 87Mexico 62 46 57 69 68 41 82 83China 62 54 37 50 46 99 81 0Oman 61 50 53 35 61 77 58 84Brunei
Darussalam 44 46 42 32 39 29 55 65Kazakhstan 42 14 32 36 32 27 64 72
Libya 35 13 12 16 17 78 63 52Algeria 33 15 19 34 28 11 52 67
Botswana 33 26 19 25 28 20 48 62Nigeria 30 11 19 17 16 27 54 58
CORE REPUTATIONAL METRICS
Key SWF metrics: transparency and accountability
Q. How important to you are the following factors in deciding whether you would approve or disapprove of a sovereign wealth fund investing in your country and industries?
% Very important
Base: PSB Sovereign Wealth Study (among all) 1064
Sovereign Wealth comparison: Transparency
Q. What is your impression of how transparent these sovereign wealth funds are or would be in terms of their decision-making compared with other sources of investment?
% Very/somewhat transparent
Base: PSB Sovereign Wealth Study (among all) 1064(respondents see 9 of 19 countries)
Sovereign Wealth comparison: Accountability
Q. To the best of your knowledge, which of these factors do you think apply to the following country sovereign funds: accountability? (% Applies)
% Very/somewhat transparent
Base: PSB Sovereign Wealth Study (among all) 1064(respondents see 9 of 19 countries)
SUMMARY & IMPLICATIONS
Summary
• Low familiarity with SWFs driving: – Low favourability– Low trust– Underlying concerns, e.g., political agenda
• Interest increasing through the downturn – Less blame for market turmoil– Seen as long term investors– Accelerating BRIC interest
• SWF image currently tied to host country image– Political, economic stability, rule of law, international
standards are key drivers for country image and therefore SWF approval
– Transparency and Accountability key SWF metrics• Highest performers on key country and SWF metrics: Norway,
Singapore, Hong Kong achieve
IMPLICATIONS
The competitive challenge
1. SWFs are set to face greater competition from each other – as well as other sources of funding – for the best assets and investments
2. SWFs may face resistance, and in some cases protectionism, founded on continuing concerns over their behaviour; and
3. The pace of their adoption of global standards of corporate accountability – and their ability to communicate progress – will be a factor in both the above
The communications challenge
1. Expectations will increase with importance2. Need to act to combat protectionism3. Competition for assets will become keen4. Building trust at home5. Building trust abroad6. Country image – business inhibitor or competitive advantage?
Practical strategies for Sovereign Wealth Funds
1. Adopt international standards of corporate behaviour
2. Open a real dialogue3. Build reputation in the round4. Focus: stakeholder and country based
communication5. Tackle the country challenge6. Leaders exceed societal expectations
Adopt international standards of corporate behaviour
Practical strategies for Sovereign Wealth Funds
1. Adopt international standards of corporate behaviour
2. Open a real dialogue3. Build reputation in the round4. Focus: stakeholder and country based
communication5. Tackle the country challenge6. Leaders exceed societal expectations
Practical strategies for Sovereign Wealth Funds
1. Adopt international standards of corporate behaviour
2. Open a real dialogue3. Build reputation in the round4. Focus: stakeholder and country based
communication5. Tackle the country challenge6. Leaders exceed societal expectations
Practical strategies for Sovereign Wealth Funds
1. Adopt international standards of corporate behaviour
2. Open a real dialogue3. Build reputation in the round4. Focus: stakeholder and country based
communication5. Tackle the country challenge6. Leaders exceed societal expectations
Practical strategies for Sovereign Wealth Funds
1. Adopt international standards of corporate behaviour
2. Open a real dialogue3. Build reputation in the round4. Focus: stakeholder and country based
communication5. Tackle the country challenge6. Leaders exceed societal expectations
Practical strategies for Sovereign Wealth Funds
1. Adopt international standards of corporate behaviour
2. Open a real dialogue3. Build reputation in the round4. Focus: stakeholder and country based
communication5. Tackle the country challenge6. Leaders exceed societal expectations
Q&A AND DISCUSSION