Clouds gather over Abu Dhabi's Sheikh Zayed mosque, the third largest in the world. Financiers in the emirates are employing defensive tactics as they fear a new storm may hit equities Photo: AFP
Abu-Dhabi's retreat from Barclays Bank is a warning sign that sophisticated investors in the Gulf think the rally in global equities is starting to look mature.
As a result, they have begun to rotate out of "risk assets" into more defensive positions.
A senior manager for a Gulf fund said the shift away from Western banks was largely a tactical play. "They'll come back when shares are cheaper again, perhaps much cheaper. They are not fools," he said.
Related Articles
Barclays: shares, charts, data
Analysis: sale may be good news for Government
Abu Dhabi sheikh makes £1.5bn on Barclays stake sale
Crisis has seen power shift and the East emerge from West's shadow
The Man City Sheikh has a winning investment strategy
Fund and share tips for a bear market rally
The super-rich Emirate is likely to pocket around £1.5bn on its brief fling with Barclays. If the Wall Street adage - "sell in May and come back on Labour Day" - holds true this year, the exit from UK bank stocks may prove deft timing.
Qatar's Investment Authority (QIA) has also taken profits on Barclays, trimming its stake from 6.4pc to 5.8pc in April. It moved early, but wealth funds often use the technique of "layering" in and out of positions.
"They like to get out before they see the peak," said Stephen Jen, head of currencies at Blue Gold Capital and an expert on soverign wealth funds.
"They are not under pressure to pick tops and bottoms, so they go in at the knees and out at the shoulder. We have had have had a tremendous rally with the S&P 500 up over 40pc and there is a lot of concern in the markets that we could go into a second 'U' (of a `W'-shaped downturn)," he said.
The petro-states of the Gulf account for roughly half the $2 trillion of assets held by sovereign wealth funds worldwide. The giant is the Abu Dhabi Investment Authority (ADIA), which had an estimate $875bn at the top of the boom. It is the power behind the International Petroleum Investment Company (IPIC) in the Barclays deal.
After some false starts on, ADIA has emerged as a financial brain-trust that can compete toe-to-toe with Goldman Sachs or any private equity group. "They are among the best investors worldwide," says Larry Fink, head of BlackRock.
In the early 1990s ADIA was one of few to see that Japan was going through a deep structural crisis. It liquidated holdings in Tokyo while others held on as one bear market after another roared and fizzled. After twenty years the Nikkei is still down by three quarters.
ADIA's team, recruited globally and run by an Abu Dhabi royal who once traded European equities, is alert to the risk that this downturn could also prove intractable. A Japanese-style "Lost Decade" for the whole world may be unlikely after the enormous stimulus thrown at the crisis, but the emergency measures themselves create sovereign risk.
Like Norway's Petroleum Fund, ADIA holds a wide range of global assets in amounts that be sold easily and rarely reach a level where they set off protectionist worries - although it has just bought 9pc of Daimler, coming in as a white knight at the bottom of the market.
Gas-rich Qatar comes later to the wealth fund game. After a bad run buying Chelsea Barracks and London's Shard of Glass at the top of the bubble, and botching a bid for Sainsbury's, it has shaken up its funds and brought in top talent from around the world. It will not make the same error twice.
A senior manager for a Gulf fund said the shift away from Western banks was largely a tactical play. "They'll come back when shares are cheaper again, perhaps much cheaper. They are not fools," he said.
Related Articles
Barclays: shares, charts, data
Analysis: sale may be good news for Government
Abu Dhabi sheikh makes £1.5bn on Barclays stake sale
Crisis has seen power shift and the East emerge from West's shadow
The Man City Sheikh has a winning investment strategy
Fund and share tips for a bear market rally
The super-rich Emirate is likely to pocket around £1.5bn on its brief fling with Barclays. If the Wall Street adage - "sell in May and come back on Labour Day" - holds true this year, the exit from UK bank stocks may prove deft timing.
Qatar's Investment Authority (QIA) has also taken profits on Barclays, trimming its stake from 6.4pc to 5.8pc in April. It moved early, but wealth funds often use the technique of "layering" in and out of positions.
"They like to get out before they see the peak," said Stephen Jen, head of currencies at Blue Gold Capital and an expert on soverign wealth funds.
"They are not under pressure to pick tops and bottoms, so they go in at the knees and out at the shoulder. We have had have had a tremendous rally with the S&P 500 up over 40pc and there is a lot of concern in the markets that we could go into a second 'U' (of a `W'-shaped downturn)," he said.
The petro-states of the Gulf account for roughly half the $2 trillion of assets held by sovereign wealth funds worldwide. The giant is the Abu Dhabi Investment Authority (ADIA), which had an estimate $875bn at the top of the boom. It is the power behind the International Petroleum Investment Company (IPIC) in the Barclays deal.
After some false starts on, ADIA has emerged as a financial brain-trust that can compete toe-to-toe with Goldman Sachs or any private equity group. "They are among the best investors worldwide," says Larry Fink, head of BlackRock.
In the early 1990s ADIA was one of few to see that Japan was going through a deep structural crisis. It liquidated holdings in Tokyo while others held on as one bear market after another roared and fizzled. After twenty years the Nikkei is still down by three quarters.
ADIA's team, recruited globally and run by an Abu Dhabi royal who once traded European equities, is alert to the risk that this downturn could also prove intractable. A Japanese-style "Lost Decade" for the whole world may be unlikely after the enormous stimulus thrown at the crisis, but the emergency measures themselves create sovereign risk.
Like Norway's Petroleum Fund, ADIA holds a wide range of global assets in amounts that be sold easily and rarely reach a level where they set off protectionist worries - although it has just bought 9pc of Daimler, coming in as a white knight at the bottom of the market.
Gas-rich Qatar comes later to the wealth fund game. After a bad run buying Chelsea Barracks and London's Shard of Glass at the top of the bubble, and botching a bid for Sainsbury's, it has shaken up its funds and brought in top talent from around the world. It will not make the same error twice.
Posts
0 comments:
Post a Comment