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Fri 16 Jan 2009 08:12 AM

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Abu Dhabi SWF 'may have lost $125bn' in global crash

New report claims emirate's wealth fund 'hard hit by recent fall in global equities'.

Abu Dhabi Investment Authority may have lost $125 billion in 2008, after the global credit crisis cut asset prices, economists at the Council on Foreign Relations said in a report.

Abu Dhabi’s fund was “hard hit by the recent fall in global equities”, Brad Setser and Rachel Ziemba wrote in the report released on the New York-based organisation’s website, newswire Bloomberg reported.

“A high allocation to equities, emerging market and private equity” contributed to the drop, they said.

The losses, the report added, pushed the sovereign wealth fund down to second place behind Saudi Arabia.

The emirate's fund was managing $328 billion at the end of 2008 compared with $453 billion a year earlier, the report claimed.

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.

Erik Portanger, a spokesman for the Abu Dhabi Investment Authority, declined to comment.

The worst financial crisis since the 1930s Great Depression has led to almost $1 trillion in losses at banks and financial institutions worldwide and Gulf sovereign wealth funds have invested billions of dollars in financial institutions, the report added.

The Kuwait Investment Authority last January paid $3 billion for a stake in Citigroup Inc. and invested $2 billion in Merrill Lynch & Co.

Abu Dhabi’s Investment Authority bought a 4.9 percent stake in Citigroup for $7.5 billion in November 2007.

The Council on Foreign Relations, founded in 1921, is an independent organization that promotes understanding of foreign policy and America’s role in the world.

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Hal-Luke Savas 11 years ago

I wonder why a large bulk of the sovereign wealth of all Middle East nations was not invested in the Middle East at first place; for example on tourism, education, advanced training, nascent technologies and high technology research etc?. I wonder why there is still no high tech industry producing aviation, medical, scientific products in the Middle East (I mean indigenous not somebody else's bolt-on licence production) I think it is almost guaranteed that if at least half the sovereign wealth that was invested abroad was invested in Middle East, we would today buying high tech products from Middle East manufacturers and suppliers!! But it seems luxury goods imports benefited more from sovereign wealth than local entrepreneurs (so sad very bad).

Martin 11 years ago

Dear Hal-Luke Saves, I appreciate your comment. That is exactly what I have been 'glad' about because the fact that high-tech still comes from the West our economy always rebounds because the Middle East always needs us. Look in every sector, architecture, media, medicine, chemistry, all the invention and products are developed there. And that is why the SWF invest there.

abdel 11 years ago

It is so easy to start with a high tech industry, the only thing you need is the will to achieve. If you have the money to back it up, it makes it all the more eay. You look a what your passion is. In the ME it seems to be cars. Why not start building cars. If the Germans can and the Japanes can why shouldn't the Arabs, even the Americans build cars. Don't start about comparative advantage that's a theory to put countries in to it's place. It seems also that the highest budget that goes to weapons is in th ME. Why not build warplanes and tanks yourselfes. If the Americans can everybody can.

Luis 11 years ago

Sorry to start like this but sometimes it is hard to believe how deluded people can be. Setting up a hi-tech industry it is one of the hardest things to do, and opposed to what most people seem to believe it can not be done neither by a decree nor by buying your way with a checkbook. In order to successfully develop a hi-tech industry you need to have a number of capabilities and resources that are clearly lacking in the region (pool of engineers, competent managers, and probably to compete today top-class marketing...) If you look at the countries who have successfully built a hi-tech industry (Japan comes to mind) you will se that they start with mastering low and mid-tech before they jump. Not different from China. Sorry guys, get real. Governments can not replace people hard work.Most government sponsored hi-tech champions are nothing but waste of money (France's BULL, Brazil's IT industry...) People will need to accept the need for a reformed education system and for a different attitude towards work before you can realistically develop an indigenous hi-tech industry, and that will take several decades. True, building an airplane is not so difficult, building an airplane that matches what people who have been building airplanes for the last 60 years it is a little bit harder. And if you are building an airplane that is a match for something built in the 70s... well that is not hi-tech.