The New Power Brokers: How Oil, Asia, Hedge Funds, and Private Equity Are Shaping Global Capital Markets Four actors—petrodollar investors, Asian central banks, hedge funds, and private equity—are playing an increasingly important role in world financial markets. MGI offers new evidence on the size of these new power brokers, their impact, and their growth prospects.
Read more Launch executive summary (PDF - 1.54 MB) Launch this report (PDF - 3.15 MB) Launch slideshow
Chapter 1: The New Power Brokers
MGI details how the rising influence of the four players is jointly shaping global financial markets. Their combined assets grew from just $3.2 trillion in 2000 to an estimated $8.7 trillion–$9.1 trillion in 2006. The factors fueling their growth will persist for at least another five years and, even under conservative assumptions, all four power brokers will grow in size and influence in the years ahead.
Chapter 2: Petrodollars: Fueling Global Capital Markets
Petrodollars are the largest of the four power brokers with between $3.4 trillion and $3.8 trillion in foreign financial assets at end-2006. Assuming oil at $50 per barrel, their assets would grow to $5.9 trillion by 2012.
Chapter 3: Asian Central Banks: The Cautious Giants
Asian central banks had $3.1 trillion in foreign-reserve assets at the end of 2006 from just $1 trillion in 2000. Assuming flat or declining current-account surpluses in Japan and China, Asian reserve assets will grow to $5.1 trillion by 2012, with average annual investments of $321 billion per year in global capital markets.
Chapter 4: Hedge Funds: From Mavericks to Mainstream
Hedge fund assets under management have tripled since 2000, reaching an estimated $1.7 trillion by mid-2007 on the back of record inflows and high returns. Including leverage used to boost returns, the industry's assets rise to as much as $6 trillion—which would make hedge funds the biggest of the four new power brokers. In MGI’s base case, hedge fund assets could reach $3.5 trillion by 2012—and between $9 trillion and $12 trillion including leverage.
Chapter 5: Private Equity: Eclipsing Public Capital Markets?
Despite the intense public focus it attracts, private equity is the smallest of the four new power brokers, with $710 billion in investors' capital at the end of 2006. Even with growth rates slower than in the past few years, MGI projects that global private-equity assets under management could reach as much as $1.4 trillion by 2012.
The World's New Financial Power Brokers A shift is underway in the world's financial structure thanks to the growing importance of oil investors, Asian central banks, hedge funds and private equity. A chart-driven article examines the rise of these new power brokers. Read more on the McKinsey Quarterly site
The Coming Oil Windfall in the Gulf At an oil price of $70 a barrel, the six nations of the Gulf Cooperation Council would earn a cumulative $6.2 trillion by 2020, or more than triple the amount they earned from 1993 through 2006. Decisions by Gulf leaders on how to use this wealth will have global repercussions for decades. Read more
Mapping Global Capital Markets: Fourth Annual Report MGI's analysis highlights trends in the global financial markets across countries, regions, and asset classes. It finds assets reached $167 trillion in 2006, while capital flows climbed to a record $8.2 trillion. Read more
Mapping the Global Capital Markets Third Annual Report MGI's third analysis highlights trends in the global financial markets across countries, regions, and asset classes. It finds assets reached $140 trillion in 2005 and, for the first time, provides a detailed look at cross-border capital flows. Read more
An Executive Survey on Global Capital Markets A McKinsey Quarterly survey shows what business leaders around the world are thinking about key trends in the financial systems in their countries as well as the increasing globalization and integration of world capital markets.
Read more
The US Imbalancing Act: Can the Current Account Deficit Continue? The U.S. current account deficit could continue to grow over the next five years. However, to reverse the deficit by 2012, a massive dollar depreciation would be required.
Read more
