DUBAI (Zawya Dow Jones) - Sovereign wealth funds from Kuwait, Qatar and the UAE are poised to pour billions of dollars into the markets of Brazil, Russia, India and China next year as they seek to tap into the BRIC countries explosive economic growth, a senior executive at Credit Suisse said.
“Emerging markets in general are going to be the bigger theme in 2010,” George Pavey, managing director of Credit Suisse’s Global Markets Solutions Group in Dubai told Zawya Dow Jones in an interview yesterday. “Sovereign wealth funds from the Middle East have come to realise that long term economic growth is coming from emerging markets, mainly the four BRIC economies,” he added.
International Monetary Fund figures show the BRIC countries, with an average annual growth rate of 10.7% between 2006 and 2008, have emerged as major contributors to the global economy.
Pavey said sovereign wealth funds (SWFs) in the Middle East region have always been selective about investments, but have become even more rigorous about where they park their money following the global financial crisis.
Sovereign wealth funds from the UAE Qatar and Kuwait were anchor investors in the initial public offerings of Banco Santander’s Brazilian unit, Malaysian mobile phone operator Maxis and the Capital Malls Asia share sale, he noted.
Pavey said he expects very little SWF investment in the global financial services sector next year.
“I would imagine that financial services firms are not going to be under focus next year. They’re overweight financials now. SWFs will invest more into industrial companies, sizable companies with global footprint like car manufacturers, consumer products, transportation and they’ll continue to consider familiar sectors such as real estate and retail,” he said.
Sovereign wealth funds in the Arab Gulf region have continued to make local and overseas acquisitions in 2009 despite a painful year of equity market fluctuations and international financial system upheaval.
According to Pavey, SWFs will continue to be long-term investors as their obligation is to preserve capital for future generations.
“SWFs are here to take care of future generations. We have seen SWFs become increasingly sophisticated in the securities that they invest in and are moving away from pure debt or equity investments,” he said.