McKinsey&Company

Last year’s events have altered the fortunes of the four large groups of investors—oil exporters, Asian sovereign investors, hedge funds, and private-equity firms—described as “the new power brokers” in a 2007 report from the McKinsey Global Institute. That MGI study analyzed their rapid rise in wealth and clout at a time of soaring crude prices, expanding trade, and cheap credit. Although the boom years ended in late 2008 as the financial crisis escalated and the global economy slumped, new MGI research shows that the power brokers fared relatively well.2 But their future paths have diverged: petrodollar and Asian sovereign investors are more influential than ever, while the rapid growth of hedge funds and private-equity firms has halted abruptly.
To understand the future evolution of the power brokers, we modeled changes in their financial assets over the next five years under different macroeconomic scenarios, each with a specific trajectory for global GDP, oil prices, trade, recovery in financial markets, and other key variables. We find that the assets of oil exporters and Asian governments will grow rapidly in nearly any scenario. The source of their wealth—trade surpluses—will continue in every case we considered, though the magnitude of those surpluses would vary. Indeed, we now project that in the base-case scenario the financial assets of oil exporters and Asian governments will reach levels higher than those we projected in our original 2007 report. In contrast, our future projections for assets under management by hedge funds and private-equity buyout funds are lower. We still expect the best of each to survive and even thrive, but it will take time for the portfolios of these institutional investors to recover sufficiently for them to raise substantial new funds.