2024 Sovereign Wealth Funds Report

RESILIENCE AND GROWTH INA NEW GLOBAL LANDSCAPE SOVEREIGNWEALTHFUNDS2024 RESILIENCE AND GROWTH INA NEW GLOBAL LANDSCAPE CO-EDITORSJavier Capapé Aguilar, PhDDirector, Sovereign Wealth Research,Center for the Governance of Change,IE University Drew Johnson Associate Director, Sovereign Wealth Research,Center for the Governance of Change,IE University Sovereign Wealth Research, Center for the Governance of Change, IE University – November 2024 INDEX PREFACE4-8 1-RESILIENCE AND GROWTH IN A NEW GLOBAL LANDSCAPE:SOVEREIGN WEALTH FUNDS IN 20249-25 2-SOVEREIGN WEALTH FUNDS AND IMPACTINVESTING:A PROMISING RELATIONSHIP26-50 3-SOVEREIGN WEALTH FUNDS IN INFRATRUCTURE:DRIVING LOCAL AND GLOBAL DEVELOPMENT51-75 4-SOVEREIGN WEALTH FUNDS IN TECHNOLOGY:ARTIFICIAL INTELLIGENCE AND THE NEEDFOR FOOD AND WATER76-93 ANNEX 1-IE SOVEREIGN WEALTH RESEARCH RANKING 202494-100 ANNEX 2-SOVEREIGN WEALTH FUNDS AND SPAIN:RENEWABLE ENERGIES AND TOURISM101-108 AUTHORS108 INSTITUTIONS109 PREFACE AUTHORSManuel MuñizProvost, IE University Elisa Carbonell MartínChief Executive Officer, ICEX SpainTrade and Investment PREFACE We are pleased to present the 2024 edition of theSovereign Weal-th Funds Report, a key reference for understanding the activity andtrends of these important financial investors. This report is the re-sult of a partnership between ICEX España Exportación e Inversio-nes and the Sovereign Wealth Research Center of the IE Center forthe Governance of Change. This edition is marked by the extraordinary circumstances ari-sing from the war in Ukraine, which remains central to the globalgeopolitical landscape, and by the recent escalation of the conflictin Gaza and the Middle East, adding a new layer of uncertainty. Thehumanitarian crisis and international tensions associated with the-se conflicts have reshaped geopolitical relations and generated vo-latility in global markets. Political risks, combined with disruptionsin supply chains, have forced countries to recalibrate their econo-mic and trade strategies. In this context, the International Monetary Fund (IMF) forecaststhat global economic growth will only slightly decelerate from3.3% in 2023 to 3.2% in 2024 due to better-than-expected landingof the high inflation and high interest rates period particularly inadvanced economies. On this regard, advanced economies growthis projected at 1.8% in 2024 (+0.1pp than in 2023), while emergingeconomies, much more dynamic, will reduce velocity with an ex-pansion of 4.2% in 2024, compared to 4.4% in 2023. Notably, Chinais facing a slowdown with growth projected at 4.8% (-0.4pp), affec-ted by trade tensions and its fragile post-pandemic recovery, whilethe Indian economy, favored by global investors and less affectedby geopolitical tensions, remains a key engine with an estimatedgrowth of 7% (-1.2pp). Meanwhile, the Eurozone, which is still fa-cing difficulties consolidating a growth trajectory, improves thisyear with an expansion of 0.8% in 2024 (+0.4pp). Headline inflation,while declining in advanced economies (from 4.6% in 2023 to 2.6%in 2024), remains a significant challenge for emerging market anddeveloping economies (able to reduce it only 0.2pp to 7.9% in 2024),with global inflation projected to fall to 5.8% (-0.9pp) in 2024. The foreign direct investment (FDI) landscaperemains complex, influenced by geopolitical tensions,fragmentation and protectionist pressures. FDIweakened in 2023, with a 2% decline in global flows,reaching $1.3 trillion. This was driven by geopolitical tensions, along with tighter globalfinancial conditions. FDI into developing countries dropped by 7%,affecting particularly developing Asian economies and Africa, andless so to Latin America and the Caribbean, where commoditiesand critical minerals represented one of every four deals. Invest-ments into sustainable sectors like renewable energy (-5%) or wa-ter and sanitation, critical for achieving Sustainable DevelopmentGoals (SDGs), saw a sharper decline of over 10%. The FDI activity in 2023 and first half of 2024 was dominated by capi-tal-intensive sectors. Renewable energy was the leading recipient,benefiting from $303 billion in pledged greenfield investments in2023 and first half of 2024 (focused on emerging technologies likegreen hydrogen and in solar power). FDI in the first half of 2024 in re-newables were five times larger than in coal, oil and gas. Reflectinga trend we analyze in this report, software and IT services fell out ofthe top 10 for the first time since 2013, just to return in 2024 aimedby Bytedance and Nvidia outlined capital expenditure plans. On itspart, the semiconductor sector saw a surge, attracting $108 billionin FDI, particularly in the U.S. with announcements made by TSMC,Samsung and GlobalFoundries, catalyzed through the $52bn Chipsand Science Act. Other key sectors included communications, withdata centers attracting multi-billion investment, development andmanagement partnerships across Asia-Pacific, Europe, Lat