To Diversify Assets Amid Gulf Crisis, Qatar Fund Plans U.S. Deals

The diplomatic standoff between Qatar and its Gulf neighbors entered its third month.

And amidst this unresolved crisis Qatar is seeing to further diversify its assets and has planned to induce more U.S. investments to achieve this.

Qatar’s windfall gains from liquefied natural gas sales are handled and managed by a body that was created by the authorities there called the Qatar Investment Authority. Qatar has made very significant amounts of money from that segment as it is the world’s biggest exporter of liquefied natural gas.

Now, as a part of the investment plans made for the country, that body would invest money on infrastructure and technology in the country and most of the remaining money out of the $45 billion investment target that had been set for it would be used up for this. This was announced in Doha on Wednesday by the Chief Executive Officer of the agency – Sheikh Abdullah Bin Mohammed Bin Saud Al Thani. He said that so far, more than half of the money at its disposal has been invested already by the fund.

“For a long-term investor like us having to liquidate some of your assets with asset prices at the bottom is the worst-case scenario,” he said. “How can you develop a global portfolio strategy when you are faced with uncertainty? The answer is diversification. Diversify your investment by region, diversify by investing in all sectors.”

With the aim of showcasing that the political crisis with Saudi Arabia and its allies hasn’t impacted its ability to strike global deals, the QIA is pressing ahead with plans to invest in the U.S., reported the media in July, quoting sources and people with knowledge of the matter.

With its bulk of investments having been made in Europe, and with high profile assets that are wide ranging and include British bank Barclays Plc to Total SA and commodities trader Glencore Plc, the fund is leading the global investment deals for Qatar. The fund is driven by petroleum money and has so far managed to amass a portfolio that totals $320 billion and spread all around the globe. A large portion of Qatar’s riches have been invested by this fund.

According to the Sovereign Wealth Fund Institute, the QIA now ranks as the ninth largest in the world.

Accusing the sheikhdom of supporting Sunni extremist groups and Iranian-backed militants, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed diplomatic and transport links with Qatar on June 5. However, all such charges have been repeatedly denied by Qatar.

In a region that controls about a fifth of global oil supplies, a struggle over political dominance has started which has seen U.S. allies being pitted against each other in the region. the regional headquarters for U.S. Central Command, which includes a state-of-the-art air base the Pentagon depends on to target Islamic State, is also hosted at the small peninsular nation of Qatar.

(Adapted from Bloomberg)

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Categories: Economy & Finance, Geopolitics, Strategy, Uncategorized

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