Qatar's SWF delays investments for six months

RIYAL DEAL: Qatar Investment Authority says it will hold off from making investments for six months. (Getty Images)

Qatar's sovereign wealth fund, one of the world's largest investors, has put buying on hold for the next six months and will then focus more on energy and commodities in a major strategic overhaul.

"For the next six months we will do nothing," said Hussein al-Abdullah, executive director of the Qatar Investment Authority, a sovereign wealth fund with assets recently estimated to total $60 billion.

"Beginning in the second half of the year, we will review our strategy. The sectors we will focus more on are commodities, food, energy and water because it is an important sector and the prices will pick up," he told reporters on Thursday on the sidelines of a conference in Dubai.

Sitting on up to $4 trillion in assets, much of it from selling oil and other raw materials, most SWFs have been conservative in their investment choices, holding dollars, treasuries and shares in large US and European companies.

Many sovereign funds such as the Kuwait Investment Authority or the Abu Dhabi Investment Authority are thought to have suffered big losses on equity investments in the United States as Western markets slumped due to the global financial crisis.

Some have said they now intend to turn their buying power to new asset classes like commodities and energy, or toward domestic targets after getting burned abroad.

Experts say investing in commodities will allow the massive funds to diversify their returns and that the fundamental arguments supporting commodities investment are sound.

"Sovereign funds will employ a variety of strategies to get to commodities, not just buying the commodities directly but going via hedge funds to gain exposure in commodities markets," said economist Amrita Sen at Barclays Capital in London.

"Commodity prices have fallen a long way and we think it is a very good buying opportunity for them," she said.

Abdullah said he expected the sector to find support from growth in the major emerging markets.

"We see a structural change in commodities because of the growth of the middle classes in China and India ... the price of commodities will shoot up given that China and India are growing at 6 percent and 3 percent," Abdullah said. (Reuters)

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