SOVEREIGN WEALTH AND INSTITUTIONAL CAPITAL IN THE NEW POWER ECONOMY

The panel discusses the current state of global investment and potential fragmentation risks. Kayleigh Koch, CEO of TCW, asserts that the U.S. remains a prime investment destination and reserve currency, despite some diversification trends. Secretary Steven Mnuchin echoes this, highlighting strong U.S. economic growth fueled by AI investments. Israel Phil Mamadov of Sofas emphasizes the importance of robust governance in navigating geopolitical cycles, while Shou-Kin from China Investment Corporation focuses on trust deficits impacting capital flows. The discussion turns to opportunities in private markets, with Mnuchin noting the evolution of private equity and credit. Koch expresses caution about late-cycle valuations and potential risks in private credit, advocating for diligent risk management. Mamadov highlights the increasing appetite of sovereign wealth funds for direct deals and co-investments. Shou-Kin addresses the challenges and opportunities in deep tech and energy transition investments, emphasizing the need for balanced risk-bearing mechanisms. Koch also underscores the evolving relationships between asset owners and managers, emphasizing partnerships and capacity building. Mnuchin concludes that the risk of a U.S. sovereign debt crisis is low, suggesting private credit poses a slightly higher risk.