Archive for the ‘SWF’ Category

In consecutive days the FT has reported on the situation for equities in the Gulf region (see clipped excerpts below). In spite of the U.S. induced credit withdrawal felt around the world, the fact remains that the Gulf is liquid in every sense and can intervene via SWFs, if truly need be, without longer term repercussions, unlike the funny money show on front stage elsewhere around the world.

clipped from www.ft.com Mideast states urged to prop up stocks Middle East governments and their sovereign wealth funds were yesterday urged to intervene in their domestic stock markets by a leading Gulf banker following sharp declines in the region’s equity markets. There are fears that, despite the unprecedented oil boom, the Gulf could be heading towards a dramatic correction, similar to 2006 when hundreds of billions of dollars were wiped off the region’s equity markets. On Tuesday the Kuwait Investment Authority, Kuwait’s $200bn sovereign wealth fund, started buying into the country’s stock exchange, which was up about 20 per cent in the first half of the year, but has since fallen 21 per cent. clipped from www.ft.com Flight of foreign capital adds to woes So much for decoupling. The MSCI Gulf index is down nearly a third this year, and paradoxically, the foreign capital that was supposed to decrease the volatility of regional equity markets has been blamed for much of the slump.

Sovereign wealth funds (SWFs) are not new, by any means, but their degree of asset accumulation and willingness to deploy it overseas, is unprecedented. And this is appreciated, by global investment and commercial banks, especially those in the U.S. SWFs are increasingly important players in equity markets and are not only providing some support on the “buy” side, but also are poised to serve as stable shareholders. A great example of this is in Japan, where SWFs have been signaling significant increases to their allocations. Earlier this month, Kuwait (KIA) announced plans to triple its investment in Japan to $48B.  On the flip side, it goes without saying that there are tremendous positive implications for SWF domestic-oriented investment. And on that note, take a look at SWF assets (top-5) and corresponding wealth per capita (clip thumbnail image to enlarge).

Chart Sources: The Economist, Govt. of Norway Pension Fund, Reuters and PRC Embassy in U.S.

Istithmar World, the investment arm of Dubai World, and real estate developer Nakheel invested an undisclosed sum in Montreal-based Cirque, expanding a 15-year partnership between the latter two entities reached last spring. See Reuters clip below.

clipped from www.reuters.com Dubai firms buy stake in Cirque du Soleil Two government-owned investment firms in Dubai have acquired a 20 percent stake in the colorful Canadian acrobatic troupe Cirque du Soleil, furthering the desert city’s plans to expand its tourism appeal and lengthening its list of foreign investments. Cirque du Soleil has annual sales of more than $700 million and attracts nearly 10 million visitors a year, making it one of the world’s largest entertainment businesses.

General Electric shares may have short circuited after the company’s surprising earnings miss earlier this year. HOWEVER, Mr. Immelt clearly has his eyes set on high growth and Abu Dhabi’s investment arm is showing unequivocal support of its partner in declaring its intention to become a top-10 shareholder. Read the rest of this entry »

Reuters Dubai reports by way of the Financial Times that Qatar’s sovereign wealth fund the Qatar Investment Authority (QIA) is considering backing a share issue by Barclays PLC (NYSE ADR: BCS). The issue could approach US$8 billion. QIA has already bought a stake of under 2% in Credit Suisse (NYSE ADR: CS). QIA is said to have about $60B of AUM and is looking to spend $10B – $15B on bank stakes over the next two years.

By way of the New York Post, Reuters reports the Abu Dhabi Investment Council is under negotiations to buy a 75% stake in the NYC Chrysler Building, an investment valued at $800M.