With the spending capacity of western governments constrained, SWFs are likely to become an attractive source of funding. Damien Meyer / AFP
With the spending capacity of western governments constrained, SWFs are likely to become an attractive source of funding. Damien Meyer / AFP

Gulf funds may rescue the West



The deep pockets of Gulf sovereign wealth funds (SWFs) could be an increasingly important source of funding for western economies facing spending cuts in the new era of austerity. Projects in Europe may become more financially attractive for the region's government investment vehicles as austerity measures by EU governments depress market valuations, said Dr Alexander Mirtchev, the founder and chairman of the US economic consultancy Krull.
"These SWFs are starting to look increasingly as the premier source of available financing for a cash-starved international financial system," said Dr Mirtchev, who is also an independent director of the Kazakhstan SWF Samruk-Kazyna. "The Gulf SWFs can underwrite the autonomy of states by acting as an insurer of last resort - in other words, a buffer against global crises and cyclical development."
SWFs could become increasingly accepted as investors in the US and Europe, as the spending capacity of western governments remains constrained by the need to cut bulging budget deficits, he said. Policymakers in the UK, Japan, Greece and Ireland are already cutting their spending to reduce public debt. Globally, the wealth of SWFs is expected to grow to more than US$6 trillion (Dh22.03tn) next year from nearly $4tn now, with signs of increased activity already emerging after the global financial downturn.
The Abu Dhabi company Aabar Investments's purchase of a 4.9 per cent stake in UniCredit, Italy's largest bank, and Qatar Holding's £1.5 billion (Dh8.3bn) purchase of the luxury London department store Harrods are recent examples of investment funds from the region buying European assets. But barriers to the investment vehicles having their pick of projects in the US and EU remain. A tendency towards protectionism and concerns about foreign ownership of domestic assets are likely to be among the hurdles SWFs face, Dr Mirtchev said. More significant, perhaps, were lingering suspicions about the role and intentions of the investment vehicles, he said.
Suspicions arose in 2006 when plans by then-US president George W Bush to allow Dubai's DP World to operate some US ports was met with opposition from many US politicians. "Gulf and other SWFs continue to be subject to uncertainty and even outright suspicion, and considered as policy tools for their own governments," Dr Mirtchev said. "The new, mature Gulf SWFs are better positioned to counter such arguments."
The region's SWFs have made significant strides to improve their transparency and accountability practices in recent years. In addition to subscribing to the Santiago Principles - a voluntary code of practices agreed to in 2008 by global SWFs including those from Abu Dhabi and Kuwait - the Abu Dhabi Investment Authority and Mubadala Development have won plaudits for their efforts to increase transparency and disclosure.
There was also a need for Gulf investment vehicles to improve their awareness of the political risks sometimes inherent in investments. A global investment survey by the World Bank's Multilateral Investment Guarantee Agency (MIGA) last year found an inadequate anticipation of political risk among investors from the Arab world, with a common problem being the absence of insurance schemes to manage this category of risk.
Regulatory restrictions, breaches of contract, terrorism, war and civil disturbances are deemed political risks by the World Bank. "This points to the fact that work still needs to be done to address the knowledge gap that exists on the investor side when it comes to risk mitigation insurance," said Stephan Dreyhaupt, the head of the research and knowledge group at MIGA. The pitfalls Gulf investors could face abroad were illustrated last week when a judge in the UK ruled in favour of the UK developer CPC Group in its court action against Qatari Diar Real Estate Investment. CPC sued the property investment arm of Qatar's sovereign wealth fund over an aborted agreement to build luxury apartments in London.
tarnold@thenational.ae

Key Points
  • Protests against President Omar Al Bashir enter their sixth day
  • Reports of President Bashir's resignation and arrests of senior government officials
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How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

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THE LIGHT

Director: Tom Tykwer

Starring: Tala Al Deen, Nicolette Krebitz, Lars Eidinger

Rating: 3/5

The specs

Engine: 3-litre twin-turbo V6

Power: 400hp

Torque: 475Nm

Transmission: 9-speed automatic

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Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
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Emergency

Director: Kangana Ranaut

Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry 

Rating: 2/5

If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.

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How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Match info:

Portugal 1
Ronaldo (4')

Morocco 0

Scorebox

Dubai Sports City Eagles 7 Bahrain 88

Eagles

Try: Penalty

Bahrain

Tries: Gibson 2, Morete 2, Bishop 2, Bell 2, Behan, Fameitau, Sanson, Roberts, Bennett, Radley

Cons: Radley 4, Whittingham 5

Recipe: Spirulina Coconut Brothie

Ingredients
1 tbsp Spirulina powder
1 banana
1 cup unsweetened coconut milk (full fat preferable)
1 tbsp fresh turmeric or turmeric powder
½ cup fresh spinach leaves
½ cup vegan broth
2 crushed ice cubes (optional)

Method
Blend all the ingredients together on high in a high-speed blender until smooth and creamy. 

UAE currency: the story behind the money in your pockets
Afghanistan Premier League - at a glance

Venue: Sharjah Cricket Stadium

Fixtures:

Tue, Oct 16, 8pm: Kandahar Knights v Kabul Zwanan; Wed, Oct 17, 4pm: Balkh Legends v Nangarhar Leopards; 8pm: Kandahar Knights v Paktia Panthers; Thu, Oct 18, 4pm: Balkh Legends v Kandahar Knights; 8pm: Kabul Zwanan v Paktia Panthers; Fri, Oct 19, 8pm: First semi-final; Sat, Oct 20, 8pm: Second semi-final; Sun, Oct 21, 8pm: final

Table:

1. Balkh Legends 6 5 1 10

2. Paktia Panthers 6 4 2 8

3. Kabul Zwanan 6 3 3 6

4. Nagarhar Leopards 7 2 5 4

5. Kandahar Knights 5 1 4 2

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The specs

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Power: 650hp at 6,750rpm

Torque: 800Nm from 2,500-4,000rpm

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On sale: now

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Chelsea
 Morata (69'), Luiz (88')
Burnley Vokes (24', 43'), Ward (39')
Red cards Cahill, Fabregas (Chelsea)

COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners

The Word for Woman is Wilderness
Abi Andrews, Serpent’s Tail