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Wed 2 Jan 2008 02:34 PM

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Kuwait joins hunt for subprime bargins

Gulf Arab state eyeing investments in US in wake of credit crisis, particularly in financial services, report says.

Kuwait is eyeing investments in the US in the wake of the subprime credit crisis, particularly in financial services, UK daily the Financial Times quoted the head of the Gulf state's investment authority as saying.

"Perhaps we are at the eye of the storm now and are close to the peak of the problem," Bader Al-Saad, head of state-run Kuwait Investment Authority (KIA), told the newspaper.

The KIA invests the massive surpluses of the Middle East's fourth-largest oil exporter.

"We don't see prices dropping much more," Al-Saad said in the article posted on the FT's website.

The subprime crisis in the US hit a range of of banks, mortgage lenders, bond insurers and home builders.

With oil prices rising nearly fivefold since 2002, Gulf Arab state investment funds are looking to spend some of the windfall on global assets.

The Abu Dhabi Investment Authority, likely the world's largest sovereign wealth fund, agreed to buy up to 4.9% of Citigroup in November in a $7.5 billion deal.

"With Citi, the Abu Dhabi Investment Authority had good timing," Al-Saad said.

Kuwait last week raised its surplus forecast for the 2007/08 budget year to March to around 6.3 billion dinars on higher oil revenues as expected.

Al-Saad also said KIA was interested in Vietnam. "They are learning from the Chinese experience and it is easier to enter Vietnam than other emerging countries," Al-Saad said.

"We are interested in buying a stake in a financial institution but these stakes are not cheap," he said.

The KIA was looking at property in secondary cities in China rather than Beijing or Shanghai, while it was cautious about Chinese stocks, Al-Saad added.

"Asset prices in the Chinese equity market are inflated because in China so much money is chasing so few opportunities," he said. (Reuters)

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