Sovereign wealth funds (SWFs) of four oil-exporting Gulf states lost around $350 billion last year due to the global financial crisis, according to a UN report.
However, the funds — those of Saudi Arabia, Kuwait, Qatar and Abu Dhabi — almost maintained their total asset value at the end of 2008 after governments injected into them huge returns from oil income, the United Nations Conference on Trade and Development (UNCTAD) said in a report.
The World Investment Report 2009, released last week, said that assets held by the four Gulf funds dropped to $1.115 trillion last year from $1.165 trillion at the end of 2007 and that government injections of $300 billion helped narrow their losses.
Abu Dhabi Investment Authority (ADIA) was the most affected, as it shed around $183 billion from the $453 billion it held in 2007. But the government pumped $57 billion into the fund, helping it end last year at $329 billion.
Kuwait Investment Authority (KIA), which owns stakes in Daimler and Citigroup, lost $94 billion from $262 billion it held at the end of 2007. The Kuwaiti government, however, injected $59 billion, helping the fund to stand at $228 billion at the end of last year.
Qatar Investment Authority (QIA) lost $27 billion and ended at $66 billion in 2008, while Saudi assets, run by the Saudi Arabian Monetary Agency (SAMA), valued at $501 billion at end-2008, shed around $46 billion, the report said.
Gulf SWFs have never disclosed the size of their assets nor losses.
The UNCTAD report said that in recent years Gulf SWFs have become more proactive investors, entering riskier investments and targeting strategic holdings in international companies.
“The recent collapse of real estate and equity markets has generated large losses for SWFs, but it also offers investment opportunities,” UNCTAD said.
As a result, some Gulf SWFs have become more cautious in investing abroad and turned to investments in domestic economies.
The four Gulf states pump more than 13 million barrels of oil per day, just under half of total Opec production of around 29 million bpd.