The assets of sovereign wealth funds of the Gulf Cooperation Council countries increased by 20% over the past two years to reach about $4 trillion, which is equivalent to 37% of the total assets of global sovereign wealth funds, according to the S&P Global report.
The assets of these funds are eligible for increase in light of a possible surplus of the GCC budget of about 9% in 2023 and 6% in 2024 as a percentage of the gross domestic product, which means more financial flows to these funds, which creates investment opportunities locally and abroad, according to the report.
Gulf sovereign wealth funds play a pivotal role in the growth of the economies of the Gulf region and the creation of new job opportunities, in addition to diversifying the sources of the economies of the Gulf countries away from gas and oil.
In addition to the interest of Gulf sovereign funds in achieving the national development strategies of their governments and investing in various local sectors, they seek to expand their presence globally in various sectors. India, China and other Asian countries stand on the radar screens of these funds, at a time when economic, trade and diplomatic relations with Asia are deepening. Green investments and zero carbon emissions targets are also at the center of her concerns.
Investment opportunities in Egypt and Turkey
The report indicated that the Gulf sovereign funds are living their golden age. There are five on the list of the largest sovereign funds around the world. The Public Investment Fund of Saudi Arabia, the Abu Dhabi Investment Authority (ADIA), the Kuwait Investment Authority, the Qatar Investment Authority (QIA) and the Investment Corporation of Dubai (ICD) have combined assets under management of approximately $3.3 trillion.
Also, five of the top 10 spending sovereign funds in the world for the year 2022 were from the Gulf Cooperation Council countries, with investments of approximately $74 billion, of which the United Arab Emirates acquired 62% through three funds, which are (ADIA), Mubadala, and (ADQ). It was followed by Saudi Arabia with 28% through the Public Investment Fund, then Qatar with 10% through the Qatar Investment Authority, according to data from the Sovereign Wealth Funds Institute.
The report added that sovereign wealth funds in the GCC countries have become attractive to invest in difficult times, as they pumped new cash flows in 2022 amounting to $83 billion.
The report expected the continued generation of foreign currencies from oil, which would allow Gulf funds to direct these cash flows to countries in the Middle East and North Africa and other emerging markets, which offer interesting investment opportunities, at a time when those countries need external financing due to their exposure to geopolitical and economic shocks and lack of funds. Foreign currencies, such as Egypt and Turkey for example.
