AS concerns rise about the increasing clout of state-owned investment funds, Singaporean capital is seen as potentially less threatening than other sources of government-linked funding, analysts say.

In the latest major overseas investment by a sovereign wealth fund, the Government of Singapore Investment Corporation (GIC) said last week that it would inject 11 billion Swiss francs (S$18.9 billion)) into UBS, Switzerland's largest bank.

UBS said a strategic investor in the Middle East, which it did not identify, is injecting an additional two billion francs into the bank, which revealed further writedowns of around US$10 billion (S$14.5 billion) due to a crisis in the US subprime mortgage sector.

ADIA would get a 4.9 per cent stake in America's second-biggest bank by market worth.

For GIC, the stake in UBS is its largest-ever investment in a company, and could leave it with a total shareholding of about nine per cent, said Mr Tony Tan Keng Yam, deputy chairman and executive director.

'Sovereign wealth funds (SWFs) have recently emerged as among the most important players in global financial markets,' an October report by Citigroup Global Markets said. The funds' estimated three trillion US dollars in assets are projected to more than double over the next five years, it said.

The rise of SWFs has led to concerns over a lack of transparency and has raised national security or broader strategic concerns in recipient countries, the report said.

Relations between Singapore and Thailand became strained last year after state-linked investment firm Temasek Holdings bought Thailand's Shin Corp, a deal which helped lead to the ouster of Thai Prime Minister Thaksin Shinawatra in a coup after his family got a tax-free windfall from the sale.

Temasek and GIC are the two vehicles used by Singapore to invest its massive savings globally.

Despite the row with Thailand, Mr Leon Perera, group managing director of Spire Research and Consulting, said 'the more interesting story' is how the developed countries will respond to SWFs.

The Organisation for Economic Cooperation and Development said recently that many SWFs are viewed as 'opaque and secretive... (and) at odds with standards applied in global financial markets'. It called for codes of conduct for the funds.

'I think there is clearly a creeping backlash against sovereign wealth funds in developed countries,' said Mr Perera.

When Dubai Ports World of the UAE last year took over British-based Peninsular and Oriental Steam Navigation Company, American lawmakers fiercely blocked a US component of the deal, citing national security fears.

Mr Perera said the potential for such political tensions are probably less when Singaporean funds are involved.

'I think Singapore may be seen to be a more safe... provider of capital,' he said.

Mr Ilian Mihov, an economics professor at graduate business school Insead in Singapore, said that while funds from Russia and the Middle East have triggered concerns in Europe and the United States, Singaporean investment is seen as more acceptable due to the city-state's 'Western model' of capitalism.

'I think that the backlash towards Singapore might be smaller and therefore it might be more welcome into negotiations for large transactions like this one,' Mr Mihov said, referring to the UBS deal.

Citigroup's report estimated the Abu Dhabi Investment Authority fund has assets of about US$875 billion.

GIC says it manages 'well above' US$100 billion dollars, but analysts say it could be as much as US$300 billion or more. Temasek says its net portfolio worth is more than US$100 billion.

'So I think a small country with a small fund is less threatening,' said Ms Annie Koh, dean of executive and professional education at Singapore Management University. -- AFP