Heads of sovereign wealth funds which control $3 trillion of assets opened a meeting in Kuwait, with a call for co-ordination in the face of the global economic meltdown.

'This crisis places an extra pressure on our group to have increased co-ordination and greater co-operation,' Kuwait Investment Authority managing director Bader Al Saad said at the opening session.

Sovereign wealth funds bought stakes in many big banks including UBS, Citigroup and Merrill Lynch to help bale them out during last year's credit crunch but the funds' overall values have plunged amid sharp falls in stock market indexes, according to a report in our sister newspaper Gulf Daily News.

'Today, the whole world has entered into a new era, an era dominated by politicians leading the markets. This will impact the future of the markets,' Al Saad told the conference of the International Working Group (IWG) of Sovereign Wealth Funds.

'We will see more regulated and controlled markets. We will see more nationalisations and greater protectionism. Over-regulation will lead to deficiencies in the markets. We hope this will be temporary,' he said.

Founded a year ago by funds in 23 countries, the IWG has finalised a code of ethics, known as the Santiago Principles, in co-operation with the International Monetary Fund, to promote transparency.

The IWG held three meetings last year, culminating in October in Santiago, Chile, where they approved the Generally Accepted Principles and Practices of Sovereign Wealth Funds, also known as the Santiago Principles.

Besides reviewing developments in the global economy, the meeting is expected to announce the establishment of a forum for more co-ordination and co-operation among sovereign funds.

Kuwait's sovereign fund has lost $31 billion of its estimated $300 billion as a result of the global economic crisis, a legislator said in February.

Other funds have had even greater losses. Norway's state pension fund, one of the world's largest sovereign funds, lost $90.5 billion last year on the value of its holdings, according to the country's central bank.