Gulf SWFs' losses offset by diversified investments |
|
A slump in global equities has inflicted heavy losses on Gulf government funds but such losses have been more than offset by the diversified nature of their investments, according to a key Western financial institution.
The slump, caused by the ongoing global financial crisis, has already prompted GCC countries to repatriate a large part of their Western-based assets for investment at home, said the Washington-based Institute of International Finance (IIF).
It put the investments by the six-nation GCC in equities and other sectors in the United States at around $260 billion (Dh954bn) at the end of 2007.
"The sharp slump in equities and real estate prices in the US and Europe may have reduced the value of sovereign wealth funds (SWFs) that are partly invested in equities and real estate," the IIF said in a study on the GCC.
"We expect that a portion of the GCC's foreign assets that were invested in equities has incurred significant losses following the sharp fall in the price of global equities... nevertheless, the diversified nature of investments and the substantial current account surplus in 2008 should result in a significant increase in the stock of foreign assets."
Citing what it described as unofficial sources, the report said the global financial crisis had prompted the GCC governments to withdraw a "significant portion of their SWFs from abroad to invest them at home".
"Nonetheless, all GCC countries remain net external creditors. Our estimate of the stock of gross foreign assets [government, banks, and non-bank financial institutions] is at around $1.5 trillion [130 per cent of GDP] at the end of June, more than four times the gross foreign liabilities," it said.
"The sovereign and other investment funds in the GCC countries have in recent years become important to the global financial system. Such investments are believed to be diversified and cover a broad range of financial instruments, countries, and currencies. Recently, following the global financial crisis, the GCC is experiencing a new wave of capital repatriation from the US and the euro-zone to the Mena region."
A graphic provided by IIF showed the GCC's investments in US equities, as well as short- and long-term debt jumped from only around $75bn at the end of 2001 to a record $260bn at the end of 2007.
Most of the 2007 investments were based in equities, which were valued at about $140bn. Long-term debt stood at $80bn and short-term debt at nearly $40bn, according to the report.
"The GCC countries are contributing towards reducing global imbalances... a large portion of the region's oil revenues has been used to invest in infrastructure investment and oil and gas sectors to increase production and refining capacity. Sizable imports of capital goods for the large investment projects that are under way or planned, together with rising consumer goods imports, are reducing the sizable surpluses and helping to stabilise global trade imbalances.
"The GCC countries are seen as new and significant investors in world financial markets... investment in financial assets by the GCC is estimated at about half of their oil revenues. The sovereign and other investment funds in the GCC have in recent years become important to the global financial system. Such investments are believed to be diversified and cover a broad range of financial instruments."
By Nadim Kawach
© Emirates Business 24/7 2008
x
DISCLAIMER
Zawya is a distributor (and not a publisher) of content supplied by third parties and subscribers. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by those third parties, including information providers, subscribers or other users of the Service, are those of the respective author(s) or distributor(s) and not of the Company. The Company neither endorses nor is responsible for the accuracy or reliability of any opinion, advice or statement made on the Service by anyone other than authorized Service employee spokespersons while acting in their official capacities. The Company is not responsible for any infringement of intellectual property rights or breach of any applicable law or regulation, including regulation in relation to financial services or the distribution of financial products, defamation, data protection, telecommunications (including regulations relating to excessive use, spamming or other abusive activities) or obscene, offensive or illegal content). Under no circumstances will the Company be liable for any loss or damage caused by a member's reliance on information obtained through the Service. It is the responsibility of member to evaluate the accuracy, completeness or usefulness of any information, opinion, advice or other content available through the Service. Please seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content.
Read the full Member Agreement
http://www.zawya.com/legal/NewsLetter.cfm?name=disclaimer
Zawya is a distributor (and not a publisher) of content supplied by third parties and subscribers. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by those third parties, including information providers, subscribers or other users of the Service, are those of the respective author(s) or distributor(s) and not of the Company. The Company neither endorses nor is responsible for the accuracy or reliability of any opinion, advice or statement made on the Service by anyone other than authorized Service employee spokespersons while acting in their official capacities. The Company is not responsible for any infringement of intellectual property rights or breach of any applicable law or regulation, including regulation in relation to financial services or the distribution of financial products, defamation, data protection, telecommunications (including regulations relating to excessive use, spamming or other abusive activities) or obscene, offensive or illegal content). Under no circumstances will the Company be liable for any loss or damage caused by a member's reliance on information obtained through the Service. It is the responsibility of member to evaluate the accuracy, completeness or usefulness of any information, opinion, advice or other content available through the Service. Please seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content.
Read the full Member Agreement
http://www.zawya.com/legal/NewsLetter.cfm?name=disclaimer
Community Comments (0) - 
Comment on this article 
Comment on this article
The opinions of the authors expressed herein do not necessarily state or reflect Zawya. Read our Comment Policy.
Loading ...
Zawya Comment Policy:
-
Zawya encourages you to add a comment to this discussion. You agree that when you add content to this discussion your comments will not:
1.1 Contain any material which is libelous or defamatory of any person, is obscene, offensive, hateful or inflammatory or causes damage to the reputation of any person or organisation.
1.2 Promote sexually explicit material, violence, discrimination based on race, sex, religion, nationality, disability, sexual orientation or age or any illegal activity.
1.3 Be made in breach of any legal duty owed to a third party, such as a contractual duty or a duty of confidence.
1.4 Be threatening, abuse or invade another's privacy, or cause annoyance, inconvenience or needless anxiety.
1.5 Be used to impersonate any person, to misrepresent your identity or affiliation with any person, or be likely to deceive any person.
1.6 Give the impression that they represent Zawya.
1.7 Advocate, promote or assist any unlawful act such as (by way of example only) copyright infringement or computer misuse. - The content posted on www.zawya.com is created by members of the public. The views expressed are theirs and unless specifically stated are not those of Zawya. Zawya reserves the right to review all comments prior to posting and edit or delete any contribution, but Zawya is not responsible for and can not be held liable for any content posted by members of the public on www.zawya.com.
- Zawya is not responsible for the availability or content of any third party sites that are accessible through www.zawya.com. Any links to third party websites from www.zawya.com do not amount to any endorsement of that site by Zawya and any use of that site by you is at your own risk.
- By submitting your comment, you hereby give Zawya the right, but not the obligation, to post, air, edit, exhibit, telecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comments worldwide, in perpetuity.
Community Buzz
Stories
Companies
Most viewed companies by Community in the last 24 hrs
| Company Name | Country | Industry |
| Consolidated Contractors Company | Overseas | Construction and Design |
| Saudi Telecom | Saudi Arabia | Telecommunications Services |
| Saudi Binladin Group | Saudi Arabia | Construction and Design |
| Hyundai Engineering and Construction Company - Saudi Arabia | Saudi Arabia | Construction and Design |
| Zuhair Fayez Partnership Consultants | Saudi Arabia | Construction and Design |
| Saudi Electricity Company | Saudi Arabia | Electric Utilities |
| Ministry of Health - Saudi Arabia | Saudi Arabia | Ministries and Municipalities |
| Almarai Company | Saudi Arabia | Food |
| Qatar Shipping Company | Qatar | Transportation Services |
| Nissan Motor Egypt | Egypt | Transportation Products |
Projects
Most viewed projects by Community in the last 24 hrs
| Project Name | Country | Sector |
| ADNOC/ConocoPhillips - Sour Gas Fields Development - Shah Field | UAE | Oil and Gas |
| ENEC - Nuclear Power Plant | UAE | Power and Water |
| Takreer - Ruwais Refinery Expansion | UAE | Oil and Gas |
| SATORP - Jubail Refinery and Petrochemical Complex | Saudi Arabia | Oil and Gas |
| Aramco/Dow Chemical - Ras Tanura Integrated Refinery and Petrochemicals Complex | Saudi Arabia | Oil and Gas |
| Abu Dhabi Ports Company - Khalifa Port and Industrial Zone (KPIZ) | UAE | Infrastructure |
| Qatar Foundation - Sidra Medical and Research Center | Qatar | Real Estate |
| IGD - Gasco - Habshan 5 Gas Processing Plant | UAE | Oil and Gas |
| Emirates Aluminium (EMAL) - Smelter Complex - Phase 1 | UAE | Industry |
| Abu Dhabi DOT - Abu Dhabi Metro | UAE | Infrastructure |