Business | Investment
Abu Dhabi fund faces huge loss
The Abu Dhabi Investment Authority (ADIA) may have lost $125 billion last year, pushing the sovereign wealth fund to second place behind Saudi Arabia, as the global credit crisis hit asset prices, the Council on Foreign Relations said.
- Bloomberg
- Published: 23:51 January 15, 2009
Dubai: The Abu Dhabi Investment Authority (ADIA) may have lost $125 billion last year, pushing the sovereign wealth fund to second place behind Saudi Arabia, as the global credit crisis hit asset prices, the Council on Foreign Relations said.
Abu Dhabi's fund was "hard hit by the recent fall in global equities", economists Brad Setser and Rachel Ziemba wrote in a report released on the New York-based organisation's website. "A high allocation to equities, emerging market, and private equity," contributed to the drop.
The emirate's fund was managing $328 billion at the end of 2008 compared with $453 billion a year earlier, the report, which examined the Gulf region's four largest sovereign funds, said.
The Saudi Arabian Monetary Agency had $501 billion under management at the end of last year, up from $385 billion in 2007, the report said.
The Kuwait Investment Authority and the Qatar Investment Authority at the end of last year managed $228 billion and $58 billion, respectively.
Gulf sovereign wealth funds have invested billions of dollars in financial institutions.
The worst financial crisis since the 1930s Great Depression has led to almost $1 trillion in losses at banks and financial institutions worldwide, helping drag the benchmark S&P 500 US share index down 39 per cent in 2008.
The MSCI Asia Pacific excluding Japan Index slumped 53 per cent in 2008, the most in its two-decade history, as the crisis pushed the world's largest economies into recession.
The Kuwait Investment Authority last January paid $3 billion for a stake in Citigroup and invested $2 billion in Merrill Lynch.
The Abu Dhabi Investment Authority bought a 4.9 per cent stake in Citigroup for $7.5 billion in November 2007.
Tumbling oil prices are forcing many of the richest Gulf states to record budget deficits and may further reduce the size of their sovereign wealth funds.
Crude is now selling at below the budget break-even point for seven of the Arab world's 10 top oil producers and Saudi Arabia, the world's biggest exporter, is forecasting its first deficit in at least seven years.
The Council on Foreign Relations, founded in 1921, is an independent organisation that promotes understanding of foreign policy and America's role in the world.
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