Not long ago, I wrote that it was somewhat odd that more attention wasn’t being paid to sovereign wealth funds. This was only somewhat surprising given that oil prices were still thought “transitory” and thus the mainstream clearly felt there wasn’t anything deeper to be assembled from that. However, now that it has finally dawned that oil isn’t likely to go anywhere, the repercussions are going to be delivered even if “the market” hasn’t been prepared for it by Janet Yellen’s narrative. And it is such a simple process to grasp; high oil revenue flows to sovereign funds that end up in the world’s asset markets.

The reverse is equally true, particularly for those countries where $30-40 oil will trigger a so-far indeterminate counterflow. That this reversal has started already, rather widespread too, is not a good sign. It is difficult if not impossible to gauge exactly how that might intertwine in already-sensitive markets, but the logic of it is quite easy to grasp.

Less oil revenues in a great deal of that $7 trillion plus gains heightened scrutiny about fund performance derived from stocks, and then may add up to knock out one of the largest supporting “pillars” that keeps global stock prices from joining the spreading reset in fixed income. As it is, even the Hong Kong fund reported losses YTD of HK$35.9 billion from forex alone, meaning that redeployment and redirection is likely systemic.

There appears to be something of critical mass forming, as the frequency of these kinds of announcements is just now starting to register. From the Wall Street Journal later last night:

Funds like Samruk are at a critical juncture. For years, sovereign-wealth funds—financial vehicles owned by governments—swelled in size and number, fueled by rising oil prices and leaders’ aspirations to increase economic growth, invest abroad and boost political influence. A new wave of sovereign funds came from African countries like Ghana and Angola. Asian nations joined in with funds like 1Malaysia Development Bhd., or 1MDB.

The world’s sovereign-wealth funds together have assets of $7.2 trillion, according to the Sovereign Wealth Fund Institute, which studies them. That is twice their size in 2007, and more than is managed by all the world’s hedge funds and private-equity funds combined, according to J.P. Morgan Asset Management.