THE “wall of money” argument is a hardy investment perennial. Back in the 1980s, it was the Japanese who would sweep in and push up stockmarkets. In recent years, sovereign-wealth funds have assumed the role of sugar daddies, with cash readily available to support asset prices.

For a while, in the autumn of 2007, things seemed to be going according to script, with the funds taking stakes in a number of American financial institutions. But that round of investments turned out to be badly timed, and the sovereign-wealth funds quickly lost money on their stakes. They have been awfully quiet since, even though one would have thought the state of corporate-bond and equity markets would give them plenty of scope to exploit their buying power.

Richard Cookson, a strategist at HSBC (and formerly a journalist for The Economist), reckons this is not surprising. For a start, he thinks it was always unlikely that reserves could keep growing as fast as they did in the first few years of this decade. The growth of sovereign-wealth funds is, of course, directly related to current-account surpluses in emerging markets. But the counterpart of a current-account surplus is a capital-account deficit. It was always odd that fast-growing parts of the world economy were exporting capital to the slow-growing parts; it should be the other way round.

Over the last year, foreign-exchange reserves in several countries have started to shrink (see chart). According to Mr Cookson, the reserves of South Korea, India and Russia have dropped by around one-fourth from their peaks. This seems to be down to two factors. First, commodity prices, a big earner for emerging markets, have collapsed. Second, the currencies of emerging countries have come under pressure. In the boom years, emerging-market governments were trying to hold their exchange rates down, so they were selling their local currency and buying dollars, euros and other foreign currencies. That built up their reserves. Now that their exchange rates are falling, they no longer need to intervene.

All of this means that sovereign-wealth funds are a bit less flush. But Mr Cookson thinks that it is not just a matter of the funds being less of a net buyer; they may turn into net sellers. During the credit boom, Western banks did not just lend to hedge funds or subprime borrowers in Florida; they also lent to companies in emerging markets. In the current crunch, they are cutting back their lending across the globe.

Figures from the Bank for International Settlements show that foreign bank lending was already falling in the first half of the year—down 2.4% of GDP in China, 5.7% of GDP in the Philippines and 19.8% of GDP in the Czech Republic. Things have presumably got worse since then. Where else will borrowers in the emerging markets turn for capital but to the sovereign-wealth funds? Russia has already used some of its money to inject capital into its struggling banks.

If things get bad enough, Mr Cookson argues, the sovereign-wealth funds may be forced to sell some overseas assets to provide the money for rescue packages. In other words, if you were counting on sovereign-wealth funds to be the catalyst for a global stockmarket recovery, you may have to look elsewhere.