17/04/2017 08:02 AST

Sovereign wealth fund (SWF) assets all but stalled at $6.59 trillion in the year to March 2017 due to a combination of weak markets, low oil prices and shifts in government policy, a report from research provider Preqin showed.

Total assets under management have levelled off in the last two years, with growth of just 3 percent in 2015 and 1 percent in 2016, when assets stood at $6.51 trillion.

This is in contrast to previous years, when SWF assets grew by 17 percent between December 2011 and December 2012, and by a further 16 percent the following year, Preqin said in a report.

“Macroeconomic headwinds, low oil prices, and shifts in domestic and economic policy from their governments have all contributed to this tapering off,” said Selina Sy, editor of the 2017 Preqin Sovereign Wealth Fund Review.

Some oil-backed funds have reined in spending as their governments have used them to close budget gaps. Oil prices are currently around $56 a barrel, a long way off the highs of $115 touched in June 2015.

In another sign of belt-tightening, SWFs pulled $37.8 billion from global stock and bond markets in 2016, according to separate data from research firm eVestment.

However, hydrocarbon-backed SWFs grew by $60 billion in the 12 months to March 2017, Preqin said, suggesting the worst of the selling may be over.

In fact, only 29 percent of SWFs suffered a decline in assets in the last 12 months, versus 36 percent in the previous year.

A slim majority of 51 percent saw their assets increase in the year to March 2017, with SWFs funded by non-hydrocarbon commodities growing by $10 billion, as did those funded by non-commodity sources.

The investor class remains dominated by a handful of heavyweights with the 10 largest funds collectively holding $5.2 trillion — 79 percent of the whole. They include Norway’s $915 billion fund, the world’s biggest, and the China Investment Corporation, with $800 billion under management.

At the other end of the scale, 45 percent of SWFs hold less than $10 billion.

The sector continues to evolve, with Abu Dhabi creating a $125 billion fund by merging Mubadala Development Company and International Petroleum Investment Company.

Some smaller SWFs, such as the Turkey Wealth Fund, have also launched.

The proportion of SWFs investing in alternatives has grown, with 61 percent allocating to private equity, a record high, and 63 percent to real estate.

Some 63 percent of SWFs were also invested in infrastructure, liked for its ability to deliver steady, visible cashflows over the long term.


Reuters

Ticker Price Volume
QNBK 123.10 227,432
SABIC 98.10 636,118
PETRORABIGH 13.28 553,297
TAWUNIYA 96.90 61,416
BURUJ 31.40 85,833
SFICO 29.65 11,333
SAPTCO 14.24 35,738
Index Closing Change
NIKKEI 225 21,336.12 80.56 (0.37%)
DAX 12,995.06 -8.64 (-0.06%)
S&P 500 2,559.36 1.72 (0.06%)
British inflation at five-year high in September, rate hike on track

19/10/2017

British inflation rose to its highest level in more than five years in September, official data showed on Tuesday, adding to the likelihood that the Bank of England (BoE) will raise interest rates ne

Times of Oman

Egypt expects to renew financing deal with global banks

18/10/2017

Egyptian Finance Minister Amr El-Garhy said on Monday he expects a financing agreement with a consortium of global banks will be renewed for another year with the aim to boost foreign reserves while

Arab News

Maybank Islamic named the Best Global Islamic Financial Institution

17/10/2017

Maybank Islamic Bhd has emerged as the Best Global Islamic Financial Institution, its first ever, at the Global Finance Awards 2017.

It was also recognised as the Best Global Sukuk Bank an

New Straits Times

China shares fall, market shrugs off upbeat economic growth forecast

17/10/2017

China’s major share indexes fell on Monday as a surprisingly strong central bank economic growth projection failed to spur buying while tech stocks slumped after disappointing profit forecasts.

Gulfnews

Pakistan turns to Islamic finance market for support

15/10/2017

Pakistan's first international bond in a year is likely to be well received by investors, despite deepening concerns about the country's macroeconomic stability and deteriorating political risk profi

Nikkei Asian Review