Mideast Domination of Sovereign-Backed Deals at 15-Year High - Bloomberg

Mideast Domination of Sovereign-Backed Deals at 15-Year High - Bloomberg

Middle Eastern sovereign wealth funds accounted for more than half the value of all deals done by global state-backed investors this year, highlighting the oil-rich nations’ growing domination at a time when many peers are reducing spending.

Institutions including Saudi Arabia’s Saudi Arabia’s Public Investment Fund, Abu Dhabi Investment Authority and Qatar Investment Authority backed deals worth $52 billion in the first half of 2024, according to data from consultancy GlobalSWF.

That’s 54% of the total $96 billion deployed by state-controlled funds globally — the highest proportion since 2009. Mideast wealth funds’ contribution stood at 39% in the second half of 2023.

The figures reinforce how important the Middle East’s funds, which together control over $4 trillion of assets, have become for global capital flows. Bankers, investment titans and tech industry chiefs from around the world have been increasingly drawn to the region to help back corporate buyouts, raise new funds or finance their investment plans over the past few years.

“While the market uncertainty has invited global funds to be cautious, Gulf-based and particularly, Abu Dhabi-based funds, have received significant windfall from oil and are more active than ever,” Diego Lopez, managing director of GlobalSWF said in a report.

Still, Saudi Arabia’s PIF remained the most active sovereign fund in the world in the first six months of the year, fueled by asset transfers from the government. The Saudi government has had to find other ways to finance the PIF’s investment activities because oil prices are not high enough to cover state spending.

Meanwhile, Asian funds including GIC Pte and Temasek Holdings Pte are among those to have cut investments. That’s dragged down overall deployment by state-backed investors compared to the same period last year, according to the report.

While in absolute terms the amount invested by sovereign funds from Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain has fallen, as a portion of total state-controlled investment globally it has risen, the data show.

Not all of this cash is flowing out of the region though. For example, the PIF’s largest deal was domestically focused. While Lunate, an Abu Dhabi-based fund that manages $105 billion, acquired a stake in the largest office tower in Dubai.

Most Gulf bourses rise on firm oil, #Saudi slips | Reuters

Most Gulf bourses rise on firm oil, Saudi slips | Reuters

Most Gulf bourses closed higher on Monday amid rising oil prices, while pressure in utility and financial stocks dragged the Saudi index down.

Oil prices - a key catalyst for Gulf's financial market - extended gains to the fourth consecutive session on concerns of a fuel supply deficit stemming from peak summer fuel consumption and OPEC+ cuts in the third quarter, with Brent crude rising 0.61% to $85.52 a barrel by 1154 GMT.

The Qatari benchmark index (.QSI), opens new tab edged 0.4% higher, continuing its winning streak to a 20th session, with the Gulf's largest lender Qatar National Bank (QNBK.QA), opens new tab gaining 0.5% and Islamic lender Qatar Islamic Bank (QISB.QA), opens new tab rising 1.5%.

Dubai's main index (.DFMGI), opens new tab rose for the fourth straight session and ended 0.7% higher, helped by a 6.2% climb in Emirates Central Cooling Systems Corp (EMPOWER.DU), opens new tab and a 2.1% rise in toll operator Salik Company (SALIK.DU), opens new tab.

However, Saudi Arabia's benchmark stock index (.TASI), opens new tab slipped 0.2% with utility firm Acwa power (2082.SE), opens new tab falling 1.3% and Middle East Pharmaceutical Industries (4016.SE), opens new tab shedding 2%.

The losses in the index were capped by an 8.9% surge in Newly listed Al Taiseer Group TALCO Industrial (4143.SE), opens new tab and a 0.4% rise in oil giant Saudi Aramco (2222.SE), opens new tab.

On Sunday, Aramco signed contracts worth more than $25 billion for the second phase of the expansion of its Jafurah gas field and the third phase of expanding its main gas network.

Abu Dhabi's benchmark index (.FTFADGI), opens new tab edged down 0.01% in volatile trading, pressured by a 0.3% loss in the largest listed firm, International Holding Company (IHC.AD), opens new tab, and a 7% decline in Abu Dhabi National Energy Company (TAQA.AD), opens new tab.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab gained 0.7%, with Commercial International Bank Egypt adding 0.8% and GB Auto (GBCO.CA), opens new tab moving 9.9% high.

Major Gulf bourses track oil prices higher | Reuters

Major Gulf bourses track oil prices higher | Reuters

Major bourses in the Gulf rose in early trade on Monday, with the Saudi index leading gains on concerns of a fuel supply deficit stemming from peak summer fuel consumption and OPEC+ cuts in the third quarter.

Oil prices - a key contributor to Gulf economies - extended gains to a fourth consecutive session with Brent crude trading 0.69% higher at $85.59 a barrel by 0750 GMT.

Saudi Arabia's benchmark stock index (.TASI), opens new tab rose 0.7%, boosted by heavy gains in energy and material sector stocks.

Newly listed Al Taiseer Group Talco Industrial (4143.SE), opens new tab rose 2.6% and the largest Islamic lender Al Rajhi Banking & Investment Corporation (1120.SE), opens new tab gained 1%.

Saudi Arabia's state oil company Aramco (2222.SE), opens new tab rose 1.1% after the company signed contracts worth more than $25 billion for the second phase of the expansion of its Jafurah gas field and the third phase of expanding its main gas network.

The Qatari benchmark index (.QSI), opens new tab edged up 0.1%, continuing its winning streak to a 20th session, with the Gulf's largest lender Qatar National Bank (QNBK.QA), opens new tab gaining 0.1% and petrochemical maker Industries Qatar (IQCD.QA), opens new tab inching up 0.2%.

Abu Dhabi's main index (.FTFADGI), opens new tab rose 0.1%, gaining for a third session in a row, supported by a 0.4% rise in UAE's biggest listed company International Holding Company (IHC.AD), opens new tab and a 2.9% jump in IHC-owned investment firm Multiply Group (MULTIPLY.AD), opens new tab.

Dubai's main index (.DFMGI), opens new tab was trading 0.1% higher, with Emirates Central Cooling Systems Corporation (EMPOWER.DU), opens new tab surging 3.4% and toll operator Salik Company (SALIK.DU), opens new tab rising 0.9%.

Aramco Dividends Boost #SaudiArabia Reserves to 18-Month High - Bloomberg

Aramco Dividends Boost Saudi Arabia Reserves to 18-Month High - Bloomberg

Saudi Arabia’s foreign reserves rose to the highest in 18 months after state-controlled oil producer Aramco boosted dividend payments.

Net foreign assets held by the kingdom’s central bank jumped 5% to $445 billion, or 1.67 trillion riyals, at the end of May, the highest since November 2022, according to figures released Sunday. That coincided with Aramco paying out more than $25 billion in dividends to the government the same month, up from about $18 billion a year earlier.

SAMA, as the central bank of the world’s biggest crude oil exporter is known, receives the governments dividends from Aramco.

The country has shifted its investment strategy over the past few years. It’s now keeping a lower proportion of foreign reserves as relatively low yielding, liquid assets such as US Treasuries. Under Crown Prince Mohammed Bin Salman, it’s sought bigger returns and taken on more risk both internationally and domestically, through building up the Public Investment Fund to almost $1 trillion.

SAMA’s reserves peaked at almost $740 billion in mid-2014, shortly before a big crash in oil prices.

Aramco has been boosting shareholder payouts as it looks to use cash accumulated during 2022’s period of high oil prices and production. The company said in May that it intended to hand shareholder’s $124 billion in dividends this year. The vast majority of that goes to the central government, which owns 81.5% of Aramco stock even after the latest secondary offering and transferring a 16% stake to the PIF.

Mideast Domination of Sovereign-Backed Deals at 15-Year High - Bloomberg

Mideast Domination of Sovereign-Backed Deals at 15-Year High - Bloomberg

Sovereign wealth funds controlled by oil-rich Middle East countries have furthered their domination of deals done by global state-backed investors to the highest levels in about 15 years.

Institutions including Saudi Arabia’s Public Investment Fund, Abu Dhabi Investment Authority and Qatar Investment Authority made up 54% of the $96 billion deployed by state-controlled funds globally in the first half of 2024, according to data from consultancy GlobalSWF. That’s the highest rate since 2009, it said.

The figures reinforce how important the Middle East’s funds, which together control over $4 trillion of assets, have become for global capital flows. Bankers, investment titans and tech industry chiefs from around the world have been increasingly drawn to the region to help back corporate buyouts, raise new funds or finance their investment plans over the past few years.

“While the market uncertainty has invited global funds to be cautious, Gulf-based and particularly, Abu Dhabi-based funds, have received significant windfall from oil and are more active than ever,” Diego Lopez, managing director of GlobalSWF said in a report.

Still, Saudi Arabia’s PIF remained the most active sovereign fund in the world in the first six months of the year, fueled by asset transfers from the government. The Saudi government has had to find other ways to finance the PIF’s investment activities because oil prices are not high enough to cover state spending.

The prominence of Middle East funds has been rising at a time when many global peers have reduced spending. Asian funds including GIC Pte and Temasek Holdings Pte are among those to have cut investments, dragging down overall deployment by state-backed investors compared to the same period last year, according to the report.

While in absolute terms the amount invested by sovereign funds from Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain has fallen, as a portion of total state-controlled investment globally it has risen, the data show.

Not all of this cash is flowing out of the region though. For example, the PIF’s largest deal was domestically focused. While Lunate, an Abu Dhabi-based fund that manages $105 billion, acquired a stake in the largest office tower in Dubai.