Filed under: Deals, Citigroup Inc. (C), Advanced Micro Dev (AMD), Merrill Lynch (MER), Morgan Stanley (MS), Politics
Sovereign funds from the Middle East, China, and Singapore have invested tens of billions of dollars in U.S. companies, especially banks and brokerage firms. But, as stocks of those companies have continued to fall, the funds have taken big losses. No wonder they seem to have stopped investing in America.
On example is Morgan Stanley (NYSE: MS). According to The Guardian, “China Investment Corporation’s investment in Morgan Stanley, made just before Christmas, is also facing a significant loss. The securities it picked up for $5bn will convert to stock at $48 to $57 a share in two years’ time. At present, however, Morgan Stanley’s share price is closer to $42.”
Sovereign funds have now also lost money, at least on paper, on Citigroup (NYSE: C), Merrill Lynch (NYSE: MER), Advanced Micro Devices (NYSE: AMD), and several multi-national money center banks based in Europe.
The U.S. government and EU have asked sovereign funds to sign covenants that state they’ll only make investments for financial reasons, that they have no political agenda when they put money into banks and huge companies. Even if these funds agree, their losses are prone to keep them out of the U.S. for a long time. That means the government is pushing to restrict the nature of their investments when Wall Street needs their money the most
Douglas A. McIntyre is an editor at 247wallst.com.
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