Soon their value will be in excess of $3000bn – about twice the amount spread among the thousands of hedge funds. And, unlike hedge funds, much of the sovereign-wealth funds are concentrated in only about half a dozen places – principally oil producers. (Two notable exceptions are China, based on profits from the export boom and low labour rates, and Singapore, which has been investing craftily for more than 30 years.) And, recently, an increasing number of the sovereigns are funding direct investments; historically funds were concentrated in financial instruments.

I’m told that it cost about $20 a barrel to extract oil in the Middle East, and another $3 or $4 a barrel to run a country, including generous rewards to national leaders and their extended families. With prices well above $25 throughout the decade and more than $80 a barrel at time of writing – the transfer of wealth has been extraordinary. Is it any wonder that every Gulf nation seeks to be a financial centre and that first-class seats to the Gulf are filled with ‘suitcase bankers’?

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This year, private equity’s access to cheap credit has diminished and corporate strategic buyers also seem to have smaller acquisition appetites. Recent M&A activity is running at about half the 2006 rate of deals and dollars.

Since M&A has been the principal driver for overall FDI growth, places looking to attract more FDI may need to adjust their sights. Consider the sovereign-wealth players, especially those seeking access to technology and talent as they look to diversify their economies as well as their portfolios.

Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world’s leading companies and served in the public sector as director of White House operations.

E-mail:malachuk@oxford-analytica.com