KIA cuts global stocks exposure

The Kuwait Investment Authority has cut its exposure to global stocks and moved some assets into cash.
KIA cuts global stocks exposure
By Ulf Laessing
Sun 25 Jan 2009 10:05 PM

A government report has confirmed that the Kuwait Investment Authority (KIA), the nation's sovereign wealth fund, has reduced its exposure to global stock markets since October, shifting assets instead into short-term cash funds.In a briefing to parliament, the government said KIA had cut the ratio of international share investments in a key fund in a bid to minimise the effect of the global financial crisis on Kuwait, the world's seventh-largest oil exporter.

The news comes after KIA, which manages Kuwait's substantial oil-generated assets, last year burned its fingers by buying into U.S. banks such as Citigroup and Merrill Lynch before both stocks nosedived and the latter filed for bankruptcy protection.

KIA, which like other sovereign wealth funds does not disclose its investment policy, had come under fire in parliament for making those investments.

According to the report listing government measures since October, KIA had cut the ratio of international shares in the key Future Generation fund, a nest egg for when Kuwait's vast oil reserves run dry.

"KIA has cut the percentage of investments in stocks listed on international markets in the Future Generation Fund; this has reflected on an increase of the percentage of liquidity invested in deposits and short-term cash instruments," the report said.

The fund managed assets worth at least 72 billion Kuwaiti dinars in the 2007/08 fiscal year to March 31, Finance Minister Mustafa al-Shamali said in July.

The report did not say if and when KIA had sold or bought any stocks, saying only that among recent investments it had bought only blue chips with a low risk.

The report was part of a government briefing to parliament's financial committee on Sunday on its latest packages of measures to tackle the impact of the global credit crunch. It plans to discuss the package at a cabinet meeting on Monday.

KIA last month launched on behalf of the government an investment fund worth 1.5 billion dinars to stop a slide on the local bourse, which fell 38 percent last year. (Reuters)

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