Sarkozy calls for European sovereign funds to buy European stocks

22 October 2008

Legendary investor Warren Buffett isn't the only one who finds bargains in the current stock prices hovering at record lows. French President Nicolas Sarkozy is also one investor although his interest lies more in preventing European companies at rock-bottom prices being snared by foreign predators than in personal enrichment.

Yesterday Sarkozy called on European nations to create sovereign wealth funds as part of a "United European response" to the broadening economic crisis. This would ensure that "European companies are not bought up by non-European capital while their stock exchange values are low."

Purchases by nationally-run investment funds in the wake of the stock-market rout could also spin a profit for governments once share prices recover, Sarkozy told the European Parliament in Strasbourg, France.

''I wouldn't want to see European citizens wake up in a few months and discover that a European company is owned by non-European investors who bought at a rock-bottom price,'' Sarkozy, current holder of the 27-nation European Union's (EU) presidency, said. ''The opportunity might be there to create our own sovereign wealth funds.''

In his speech Tuesday, Sarkozy also criticized rating agencies for failing to identify the growing problem and downgrading risky assets too late. He noted the big three rating agencies are all based in the US and suggested Europe may need to create its own rating agency as a way to ensure independence.

Sarkozy claimed credit for Europe in calming the financial storm and prodding US President George W Bush into holding a global summit to rework the international economic rules in force since the end of World War II. (See: President Bush offers to host world summit to resolve financial crisis)