According to a study by the Emirates Centre for Strategic Studies the value of the GCC’s external financial portfolio fell from $1.3 trillion in 2007 to $1.2 trillion in 2008.
Total assets held by SWFs in the GCC states are estimated to be worth more than $1 trillion. If assets held by central banks – estimated to be worth $460bn – are added, the value of the combined portfolio of the Gulf’s SWFs totals $1.5 trillion.
According to the projections by the IMF, the assets of international SWFs will range from $5-$10 trillion over the next five years. International Financial Services London estimates that the funds’ assets will increase to $5 trillion by 2010 and $10 trillion in 2015.
The UAE has eight international sovereign funds – four in Abu Dhabi, three in Dubai and one in Ras Al Khaimah.
Abu Dhabi has ADIA, Mubadala, the International Petroleum Investment Company (Ipic) and the Abu Dhabi Investment Council (Adic). Dubai has Investment Corporation of Dubai (ICD), Istithmar World and DIC, while Ras Al Khaimah has RAK Investment Authority.
The GCC states have been allocating part of their SWF investments to Arab states, especially Egypt, Morocco, Jordan and Syria in sectors, such as industry, real estate and infrastructure. Asia and Africa are also seen increasingly as promising markets.
The study said GCC investment bodies that supervise the management of SWFs should work together to define a new map for combined or individual financial investment through the introduction of new priorities in their external investment programs that depend on diversification.
The study said the GCC sovereign funds should implement five measures:
– The transfer of knowledge through investments.
– Consolidation of government companies.
– The alleviation of the impact of the economic crises.
– The consolidation of regional and international co-operation through the setting up of joint funds at the regional and international levels by GCC funds.
– The implementation of reforms to boost confidence.