Qatar fund puts buys on hold

Executive director says volatility is the only investment opportunity in the next six months

The Qatar Investment Authority (QIA), one of the world's largest sovereign wealth funds, will not make any major investments for the next six months, Hussain al Abdulla, the executive director, said yesterday. The QIA is the main investment vehicle for Qatar, which has some of the brightest economic prospects in the world this year due to an expected increase in natural gas revenues. The fund, founded in 2005, has invested the majority of its assets either outside of the region or within Qatar's non-oil sector in an attempt to diversify the country's wealth away from energy sales. "For the next six months, we will be basically doing nothing," Mr al Abdulla said on the sidelines of the Wharton Global Alumni Forum, a conference sponsored by the Wharton School of the University of Pennsylvania in the US. Last year, the fund lost less than 20 per cent on its investments during one of the most difficult periods in decades, Mr al Abdulla said. Although the fund does not disclose its size, QIA is estimated to have US$60 billion (Dh220.37bn) in assets, according to the Peterson Institute for International Economics. Other investment funds, including the Abu Dhabi Investment Authority, may have suffered losses up to 30 per cent last year as a result of the global financial crisis, according to analysts. "The only investment opportunity in 2009 is volatility," said Mr al Abdulla. "We should all go for a long holiday and come back in 2010." When the fund does begin to invest again, it "will focus on commodities: food, energy and water", he said. "We see a structural change in commodities because of the growth in China and India." Cash-starved western institutions have welcomed investments from sovereign funds because they are viewed as one of the few sources of much-needed funding, with global credit in short supply. However, analysts said the funds may be growing more reluctant to make any purchases, given the global economic uncertainty. "Sovereign wealth funds should not be viewed as a piggy bank. Treat us fairly and equally," said Sheikh Mohammed bin Isa Al Khalifa, the chief executive of Bahrain's Economic Development Board and a board member of Bahrain's sovereign wealth fund, the Mumtalakat Holding Company. Earlier this week, the Qatari government announced its sovereign fund would bolster the local financial system by purchasing the investment portfolios of local banks. The move, expected to be completed by the end of this month, "will restore confidence in the banks", Mr al Abdulla said. While the QIA has recently been putting more focus on domestic priorities as the global financial crisis strains its banks and limits access to international capital markets, the authority's staff and ambitions are growing rapidly. Mr al Abdulla said the QIA already employed 125 financial professionals and planned to hire another 50 this year, tapping the talent pool that has departed from traditional western banks. [e-mail]