Traders have been speculating for several weeks that a part of the global selling in stocks that started in December may be due to oil-related sovereign wealth funds selling assets in order to make up for the shortfall in revenues due to the decline in oil.
We are starting to get some data that indicates that at least part of the selling may indeed be due to this type of selling, particularly regarding the weakness we have seen in financials.
Oil-related SWFs have significant assets. The Sovereign Wealth Fund Institute estimates that the assets under management of the largest oil-producing SWFs (Norway, Abu Dhabi, United Arab Emirates, Saudi Arabia, Kuwait and Qatar) amounts to $3.2 trillion.
On Friday, JPMorgan released a report on global flows which concluded that oil-producing countries were indeed net sellers of assets last year.