Six months ago, a ferocious debate raged in Washington and European capitals over whether sovereign wealth funds should be allowed to buy up swathes of the corporate west. Often this talk boiled down to fears over national security. Oh, to have the luxury of such concerns today. Now the issue is not that these funds might be buying but that they might stop buying – or even sell.

Neither is unthinkable. Many SWFs have been hit by a double whammy. Some are nursing heavy paper losses on the high-profile investments they had already made in publicly quoted stocks, many of them banks. This has potentially reduced their total assets under management from $3,000bn to as low as $2,300bn, Morgan Stanley estimates. It is also hard to see money continuing to flow into SWFs as it has done until recently, given the plunge in commodities and emerging market currencies. Swelling foreign exchange reserves that once contributed to growing SWF war chests are now shrinking for some. This is especially bad news for stock markets in which the traditional buyers of equities are on strike. With their unleveraged cash, long-term horizons and freedom from the tyranny of redemptions, SWFs should be near-perfect buyers of last resort.