Top 10 SWFs have $1trn in global equity markets

The world's 10 top sovereign wealth funds, holding $2.2 trillion (Dh8.07trn) of assets, invest almost half of that in international equity markets, according to a survey.

The Investor Responsibility Research Centre Institute and RiskMetrics Group, both based in New York, estimate that the top 10 funds from Abu Dhabi, Australia, China, Singapore, Kuwait, Libya, Norway, Qatar and Russia, hold just under $1tn in international equities.

It said the Abu Dhabi Investment Authority (Adia) – considered the world's largest, with assets seen about $500bn-$700bn – invests 60 per cent of these in stocks, as do sovereign funds from Kuwait and Qatar.

"Although SWFs control only a relatively small per centage of total global financial assets, in absolute terms they are already a significant investor class," the report said.

"Despite the current drops in oil prices, considering the predicted long-term trends in oil demand and supply, and barring heretofore unseen conservation or alternative energy use growth, petroleum-based SWFs will grow at a greater pace than other categories of investors. They will have increasing influence on the global economy in the long run."

Sovereign wealth funds globally form a $3trn industry which invests windfalls from oil and other exports for future generations.

About 20 of the largest SWFs last year adopted the Santiago Principles of best practices after growing calls from the West to enhance transparency and reinforce their commercial investment motives.

The IRRC Institute and RiskMetrics found the Qatar Investment Authority has the lowest level of compliance at about 58 per cent "no compliance" rating, followed by the Adia's 52.6 per cent.

Australia's Future Fund and Norway's wealth fund have the highest full compliance rating of about 90 per cent, followed by Singapore's Temasek and Government of Singapore Investment Corp.

"While engagement by long-term investors such as SWFs can be a source of governance and operational improvements for the companies, more disclosure in this area can help allay investment community concerns," the report said.

The survey also found that only few SWFs have so far shown strategic focus on environmental and social risk management and investments.

"Given SWFs are mostly long-term investors, focus in this area can help them yield the associated long-term financial benefits," it said.

"In addition to the SWFs sourced from oil revenues, clean energy funds seem to be relevant investments for diversification of their economies."


KCIC to list shares in fourth quarter

The Kuwait China Investment Company (KCIC), a firm linked to the Gulf state's sovereign wealth fund, said it had secured the final approval to list its shares on the Kuwaiti bourse during the fourth quarter.

"The Kuwait Stock Exchange Market Committee and KCIC will agree on the final listing day in two weeks," KCIC said in a statement yesterday.

Kuwait Investment Authority owns a 15 per cent stake in KCIC, which was established in 2005 with a capital of KD80 million (Dh1.02trn). Other investors include Kuwait's family-owned conglomerate Al Ghanim Industries.

The KCIC was set up to become an investment vehicle in Asia to tap into the emerging market economies' potential growth. It is currently managing assets worth about $450m.

KCIC's chief financial officer said last week the firm had approached governments in Southeast Asian countries to invest in underdeveloped farmland.

Kuwait has said it is interested in investing in agriculture and farmland in both Asia and Africa as it looks to diversify food sources.

The world's fourth-largest oil exporter has been looking at investing in East Asia to help diversify its revenue away from heavy reliance on oil exports.

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