Wall Street Journal Market Wires: Canada's New Sovereign-Wealth Fund Lacks Key Component: Sovereign Surplus

“Canada says it is launching a sovereign-wealth fund, with proponents pointing to benefits secured in Norway. Any resemblance between Canada and other countries with sizable sovereign-wealth funds is "superficial," says Karl Schamotta, chief market strategist at forex firm Corpay Cross-Border Solutions. The influential sovereign-wealth funds are typically energy exporters, like the Gulf states, who accumulate foreign-currency surpluses that need to be deployed. Canada is a net crude-oil exporter and has vast natural gas deposits. Still, Canada runs sizable budget and trade deficits, thereby required to borrow on global markets to finance consumption. "A sovereign wealth fund without a sovereign surplus is, in effect, a leveraged bet cloaked in the respectable clothing of Norwegian fiscal prudence," Schamotta says. Canada's new fund is unlikely to alter CAD's long-term trajectory, he adds.” Wall Street Journal Market Wires: Canada's New Sovereign-Wealth Fund Lacks Key Component: Sovereign Surplus