When Covid-19 struck the world more than two years ago, it hit markets with one of the most severe, unexpected economic shocks in modern history. Forecasts estimate as a result of the pandemic global GDP will be 4.5 per cent smaller this year than it would have been without the crisis.
Now, just as things have tentatively started to look up in many parts of the globe, the Ukraine invasion this February has brought severe sanctions, shortages and uncertainty to an already fragile situation. The World Bank projects a 4.1 per cent contraction for Europe and Central Asia's economies, caused by the invasion.
Whether for those managing household finances or those overseeing multi-billion dollar sovereign wealth funds, these two events, along with a series of other background trends, have made current market conditions some of the toughest in decades.
It is, therefore, notable when a financial institution performs well. Earlier this week, it was announced that the income of Abu Dhabi's Mubadala Investment Company surged by almost 70 per cent in 2021, a record in its 20-year history.
This is good news for the UAE. In remarks to The National, the group's chief executive, Khaldoon Al Mubarak, said: "It's the progress we've made in the last 20 years that makes me enthusiastic for the decades ahead." And it has been quite some progress. The assets under the company's management climbed beyond the trillion dirham mark, reaching Dh1.04tn at the end of 2021.
More widely, it forms part of a sometimes counter-intuitive lesson in how investors should navigate the tough currents of global markets at their worst . While the instinct in adverse times might tend towards caution, it would go against what many of the most skilled investors in history have advised. American entrepreneur Robert Arnott once said, "In investing, what is comfortable is rarely profitable." Mubadala has clearly learnt the value of that approach. In 2020, during the height of the pandemic, it invested more than $11 billion, an almost 50 per cent increase from 2019.
John Bogle, another American investor, counselled: "Don't look for the needle in the haystack. Just buy the haystack!" Lightheartedly, he advocated a trend increasingly prevalent in venture capital today: widely funding new ideas and startups in the hope that while many might fizzle out, one will excel.
In this analogy, Mubadala has bought a big haystack, but this time with many needles. It has invested heavily in the UK and France, with major new partnerships announced last year for both countries respectively. This week, during Greek Prime Minister Kyriakos Mitsotakis’s official state visit to the UAE, it extended its €400 million co-investment partnership with Hellenic Development Bank of Investments, which had been established in 2018.
Closer to home, the firm is focusing on sectors that are both crucial to the economy and future of the region, particularly healthcare and sustainable energy. Because of it, the UAE has new healthcare infrastructure and a future where increasingly clean, cheap and reliable electricity is remarkably close for a country so long built on oil revenues. Even deeper, it has a more sophisticated domestic economy that it hopes will diversify the economy away from hydrocarbons, a key long-term objective of Mubadala and the country's wider government.
In a 2020 profile, the firm's chief executive Khaldoon Al Mubarak spoke to the Wall Street Journal of being on the phone "all the time" in the early months of the year, asking the world's leading investors what they predicted the economic consequences of Covid-19 to be. The surprising consensus was not just that things would recover surprisingly quickly, but that even in the thick of the hardship lay great possibilities. By seizing on that informed hope, Mubadala's resilience can be a lesson for investors in even the most difficult of times.