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High Oil Prices Help GCC Sovereign Wealth Funds Grow To $4 Trillion

Assets under management of sovereign wealth funds in the Gulf Cooperation Council have expanded to $4 trillion over the past two years driven by higher oil prices.

This is the outtake of a report from S&P Global, as carried by The National, which noted that the amount is greater than the combined sovereign wealth fund assets of Asia, Latin America, and sub-Saharan Africa.

“GCC sovereign wealth funds have largely benefitted from external surpluses generated by the latest energy revenue windfall across the region to increase their global footprint and deepen their foray into global markets through diversified sectoral buys,” S&P Global Market Intelligence MENA principal economist Jamil Naayem said, as quoted by The National.

Oil prices soared last year following Russia’s invasion of Ukraine and although they have since declined significantly, benchmarks are still much higher than they were two years ago.

As a result of these swelling assets under management, Gulf Cooperation Council sovereign wealth funds are making substantial investments, too, the report revealed.

Last year, of the 10 largest investment deals with the participation of state entities, five came from GCC sovereign wealth funds. Of these, the UAE accounted for 62% of the total capital poured into these investments, while Saudi Arabia accounted for 28%. Qatar accounted for 10%.

“Although investments in large advanced economies and prominent emerging markets are likely to continue in the next few years, GCC SWFs will also recycle part of the petrodollar inflows in peer Middle East and North African economies in need of external financing. Egypt and Turkey are a case in point,” S&P’s Naayem also said.

In addition to a fuller investment war chest, the Gulf and the UAE specifically has enjoyed a strong year in listings, too. Early this year, the state oil and gas major, ADNOC, listed its gas division, which brought the country’s listing proceeds for the first quarter alone to $2.3 billion. That sent the UAE to the top spot for IPO proceeds in the region.

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By Charles Kennedy for Oilprice.com

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