InvestorQ : What are sovereign wealth funds and why are they being talked about as reasons for the crash in the Indian markets?
Mary Joseph made post

What are sovereign wealth funds and why are they being talked about as reasons for the crash in the Indian markets?

Answer
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sara Kunju answered.
6 months ago


Sovereign wealth funds are funds created out of national wealth and some of the largest wealth funds are based on oil wealth. Norway, Saudi Arabia, Kuwait and Abu Dhabi run some of the largest wealth funds. With oil prices sharply down, these wealth funds have been forced to fund their budget deficit by running down their wealth funds and that has resulted in the selling. Today, sovereign wealth funds account for over 6.1% of the total FPI investments in India and they have reacted to the sharp fall in oil prices. That possibly explains the big sell-off but they have been one of the many reasons for the sell-off.