A central theme in EU law is neutrality vis-à-vis questions of ownership, and consequently by its Article 345 of the Treaty of the Functioning of the European Union (TFEU), it refrains from subjecting member states to a duty to privatise. Both public and private market participants have been subject to equal legislative requirements, including rules relating to competition. The existence of a system of European state aid control exists to ensure that market competition is not distorted by the granting of subsidies by member states and that such states will not engage in subsidy wars among themselves. The extent to which these principles can be extended to govern the activities of non-EU states operating via SWFs in European markets is …show more content…
However, there is some indication that such funds may be moving towards a more open stance in recognition of the strategic advantages that they could deliver.
A number of authors have produced analyses highlighting significant positive abnormal short-term returns following SWF investment in publicly traded equities, alongside significant negative returns following announcements of disinvestment (Dewenter, Han & Malatesta, 2010). Kotter & Lel in their examination of the stock market response to 168 SWF investments, found that transparency of the acquiring SWF correlated with the magnitude of the abnormal positive return for a given investment (Kotter & Lel,