The new power brokers: How oil, Asia, hedge funds, and private equity are faring in the financial crisis The power brokers' collective performance in the financial crisis, though better than the sharp declines in wealth of most institutional investors, masks an important shift: Asian sovereign and petrodollar investors emerged as more influential than ever, while hedge funds and private equity saw their previously rapid growth interrupted.
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Chapter 1: Petrodollars: Shaken, but poised for growth
The financial crisis and economic slowdown of 2008 halted the five-year surge in oil
prices and foreign asset accumulation of the world’s petroleum exporters. In almost any scenario, petrodollar investors will continue to grow.
Chapter 2: Asian sovereign investors: The crisis slows growth
Although their growth rate was far slower than in the past, Asian governments were the only one of the power brokers to record any gains last year. The overall growth in Asian sovereign investors' assets was driven almost entirely by China.
The hedge fund industry hit an inflection point in 2008, when the breakdown of global credit and capital markets sparked a dramatic reversal of fortune, but the best funds will survive and, perhaps, thrive.
The global financial crisis has thrown into reverse the forces that had fueled the growth and success of leveraged buyout funds in recent years. It remains unclear
whether or when big LBOs will make a comeback. However, the rest of the private equity industry is retooling and evolving, seeking opportunities in new forms of investment and in new regions.
Slideshow The global financial crisis and recession has altered the paths of four influential groups of investors: oil exporters, Asian sovereign investors, hedge funds and private equity. View slideshow
Debt and Deleveraging: The global credit bubble and its economic consequences The recent bursting of the great global credit bubble has left a large burden of debt weighing on many households, businesses and governments around the world, as well as on the broader prospects for economic recovery in countries around the world. Read more
An exorbitant privilege? Implications of reserve currencies for competitiveness Observers assume that the United States enjoys an "exorbitant privilege" because the dollar is the global reserve currency. But MGI finds that in 2007/8, the United States gained a net benefit of just $40 billion to $70 billion—0.3 to 0.5 percent of US GDP. In the "crisis year" to June 2009, the benefit fell to between -$5 billion and $25 billion. Given this, could the United States prioritize domestic growth and jobs over its global responsibilities, sparking greater currency volatility that threatens competitiveness? Read the discussion paper Read a series of essays and join the debate on the future of the dollar on What Matters
McKinsey conversation Authors Susan Lund and Charles Roxburgh examine how the crisis rolled through the global financial system—and discuss the implications for the future of the global economy. Listen to the podcast
The new financial power brokers: Crisis update Although their paths are diverging, all will remain powerful forces in the global economy.
Read more on the McKinsey Quarterly site
Will U.S. consumer debt reduction cripple the recovery? U.S. consumers are spending less and saving more. Unless incomes grow faster, each percentage point increase in the saving rate would reduce spending by more than $100 billion—a serious drag on any recovery. Read more
Leading through uncertainty As consumers batten down the hatches and the global economy slows, senior executives confront a more profoundly uncertain business environment than most of them have ever faced. Companies that nurture flexibility, awareness, and resiliency are more likely to survive the crisis, and even prosper. Read more
Mapping global capital markets: Fifth annual report The world's financial assets rose to $196 trillion in 2007, slightly below the pace of 2006 but still faster than the historical trend—likely marking the recent peak for equity and private debt markets. Read more
The new power brokers: Gaining clout in turbulent markets Four financial market power brokers—Asian sovereign investors, petrodollars, hedge funds, and private equity firms—have grown in size and clout during the financial crisis that began in mid-2007. The crisis underscored one of the biggest benefits offered by the power brokers: vast pools of liquidity. Yet risks remain. Read more
Investing the Gulf's oil profits windfall Between 2007 and 2020, the member states of the Gulf Cooperation Council will earn $5 trillion to $9 trillion from exports of crude oil. Depending on oil prices and levels of domestic investment, 30 to 60 percent of this windfall could flow into overseas capital markets. Read more
Why baby boomers will need to work longer Most U.S. baby boomers are not prepared for their retirement. Boomers can help mitigate the consequences by remaining in the workforce beyond the traditional retirement age. That will require important changes in policy, business practices, and personal behavior. Read more on the McKinsey Quarterly site
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
