"Fondi Sovrani di Investimento: necessità di maggiore trasparenza? Il caso di Libyan Investment Authority"

The most important issues arising from the literature proliferating on Sovereign Wealth Funds are their controversial role as ¿friends or foes¿ for the international financial system and the debate regarding their low transparency level. A positive abnormal return is remarked as a market reaction to the announcement of an SWF investment, which is followed by a negative performance of the firm target of the SWF investment, observed over the long run. This may be correlated to the low transparency of SWFs and to their failure to explicitly show the purely financial purpose of their investment, avoiding any political and strategic implication in the asset allocation. This research aims to point out and highlight some of issues related to transparency which is back under the spotlight after the Libyan Investment Authority frozen assets case. It will critically evaluate the consequences that may exist for a Sovereign Wealth Fund related to their low degree of transparency and investigate the possibility of a new bias toward investing in Western Europe for ¿non-democratic¿ SWFs. I will analyze the perception of a sample of market operators, investment professionals and academics to assess which are the most important features that could make a SWF better judged by the financial markets through a questionnaire. I will then evaluate the actual situation of LIA and Libya a year after the UN sanctions. I will consider the implications for the SWF ¿panorama¿ and identify some Funds which might be directly affected by the LIA case both directly and indirectly.