Business news for Thu, 29 Nov 2007 & with word sovereign. 9 news.

CHINA Investment Corp, the nation's US$200-billion sovereign wealth fund, signaled it may invest in stocks rocked by subprime mortgage defaults. "CIC wants to be a stabilizing force in the international capital markets," Chairman Lou Jiwei told a conference in Beijing yesterday. He then cited a "recent example" in which a similar fund invested in a financial institution with subprime losses, without elaborating. Abu Dhabi Investment Authority this week agreed to buy a US$7.5-billion stake in Citigroup Inc, helping the biggest United States bank by assets to bolster capital eroded by credit-market losses. China Investment, which began operations in September, was set up to help improve returns on China's US$1.4 trillion of reserves and to oversee bailouts of the nation's own lenders, Bloomberg News said. "The steady stream of funds' buying of distressed assets tells us there is a buyer of last resort out there," said Robert Rennie, chief currency

DIC has hired the former heads of Sony and BMW and the boss of GlaxoSmithKline to advise it on strategic equity investments as the latest sign of the growing power of sovereign wealth funds

At last, a real fight for the Democratic nomination BARACK OBAMA has been a frustrating presidential candidate, a strange mixture of promise and disappointment. There is the promise of the rhetorical firepower that he put on display so memorably at the 2004 Democratic convention. There is the promise of his Kennedyesque idealism. And there is the promise of his unique background: a black candidate in a country that was once run by slave-owners; a world citizen in a country that has gloried too much in its exceptionalism; a half-Kenyan, half-Kansan who went to school in Jakarta. Yet his performance has often been disappointing. He can be languid and long-winded. During debates he often starts with a bang only to end with a whimper. He is too fond of vaporous abstractions. He sometimes looks more like the junior professor he once was than a political heavyweight, and his policies are sometimes half-baked, as when he contemplated sending troops into Pakistan, a sovereign state, and a particularly fragile one, to kill or capture al-Qaeda chieftains. ...

A fight is brewing over booming Indian gambling APART from a few pots and baskets sitting, largely unnoticed, in a corner, there is little distinctively Indian about the Sycuan Casino. The punters are the usual mix of retirees and the statistically inept. The casino has three floors with some 2,300 jangling slot machines, a few card tables and a 1,250-seat bingo hall. That is not quite enough to meet demand, which is why the Sycuan tribe wants to expand. Whether it is allowed to do so will depend on how California's voters feel about the enormous casinos that have sprouted in their midst. It will also be a test of their views of Indians. Indian tribes are free to run casinos because, as sovereign nations, they are not subject to all state laws. Yet the tribes must agree terms with the state. Last year the Sycuan, together with four other tribes, negotiated agreements with Arnold Schwarzenegger, California's governor, that would allow them greatly to enlarge their casinos in exchange for paying more taxes. A motley crew of gambling opponents, racetrack owners, unions and rival tribes objected. As a result, a judge ruled this week, the agreements must be ratified by the state's voters in February. The television advertising blitz has already begun. ...

Citigroup calls on sovereign wealth. It joins a long line of supplicants CITIGROUP may have lost its bearings and its chief executive, but it has not yet lost its memory. In 1991 a Gulf investor came to the rescue of Citicorp (as it then was), which was strapped for cash as a result of an American property downturn, among other things. Saudi Arabia's Prince Waleed bin Talal, the man in question, largely owes his place on the world's rich-lists to that decision. On November 26th the Abu Dhabi Investment Authority (ADIA), a secretive sovereign-wealth fund, displaced Prince Waleed as the bank's biggest shareholder, paying $7.5 billion for a 4.9% stake. Citi's shares rallied heartily, but it is not out of the woods yet. The boost to the bank's faltering capital ratio from ADIA's investment will offset expected write-downs on subprime-related investments in the fourth quarter. On the other hand, weakening consumer credit in America and uncertainty over its exposure to off-balance-sheet assets will add to the subprime worries. And ADIA has driven a hard bargain: the fund bought convertible securities that will yield a hefty 11% rate of interest until they become shares in 2010 and 2011. ...

China's sovereign wealth fund hopes it eventually can play a role on the global financial stage, but the $200 billion fund isn't yet ready to do major investments abroad.

In contrast to other sovereign wealth funds, China’s state-run investment fund has no immediate plans to take a large stake in any foreign company.

Following the Abu Dhabi investment authority taking a stake in Citi, sovereign wealth funds have moved centre stage again. The New York Times reports that the Chinese plan to avoid controversial overseas investment with their $200bn plus fund and instead concentrate on bolstering their own banking system.

The European Commission is exploring plans for an EU-wide law to regulate sovereign wealth funds, a move that could vastly complicate the City of London's ability to serve as hub for the investment flows from Asia, the Middle East, and Russia.