The Qatar Investment Authority is pressing ahead with plans to invest up to $35 billion in US assets over the next five years, even as Saudi Arabia is reported to have withdrawn tens of billions of dollars from global asset managers to plug a budget deficit in the face of lower oil prices.
The sovereign wealth fund yesterday announced the opening of its office in New York, as it seeks to increase its exposure to the US and the wider Americas, diversifying from its strongholds of Europe, Asia and the Middle East.
“With boots on the ground, our presence in New York will anchor our interest in the region,” said QIA’s chief executive Sheikh Abdullah bin Mohamed Al Thani.
“It is the perfect location to help strengthen our existing relationships and promote new partnerships as we continue to expand geographically, diversify our assets and seek long-term growth.”
The opening of the office, first announced in April, came amid media reports that the Saudi Arabian Monetary Agency (Sama) had withdrawn around $70bn from global asset managers in the past six months.
Sama, the kingdom’s central bank, has made the withdrawals in a bid to cut its budget deficit and to reduce exposure to volatile equities markets, reports said.
The strategies of the QIA and Sama are quite different, and not directly comparable, said Rami Sidani, the head of Middle East and North Africa at Schroder Investment Management.
“QIA’s [New York] office is a small step in its long-term investment strategy, increasing their presence in the world’s largest economy to seek further opportunities there and in the wider region,” he said.
“It’s a different agenda for Saudi, where they’re merely reallocating some liquidity back in to the domestic market that they parked internationally ready for a rainy day in order to finance their deficit following lower oil prices.”
Saudi Arabia returned to the bond market in July for the first time since 2007, in an attempt to plug its budget deficit caused by plunging oil prices.
The QIA has about $256bn worth of assets under management, according to the US-based Sovereign Wealth Fund Institute, including stakes in Total, Credit Suisse, Barclays Bank and London’s Canary Wharf.
“The decision to open an office in New York is indicative of QIA’s confidence in the country’s long-term economic growth and investment prospects, and allows the opportunity to strengthen partnerships with both public and private sector organisations,” it said in a statement.
The QIA insisted that its New York office would not detract from its investment strategy in its existing markets.
The fund plans to invest up to $20bn across Asia in the next five years, and to expand its existing offices in Beijing and New Delhi.
The QIA has in recent days taken a hit of around $5bn on its stake in the German car manufacturer Volkswagen, whose shares have plunged more than a third since it admitted falsifying emissions test data in the US.
jeverington@thenational.ae
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