Against the backdrop of a sluggish global economy that is increasingly showing signs of weakness, the Kuwait Investment Authority (KIA), which is mandated to invest the capital and proceeds from the country’s copious sovereign wealth fund, is reportedly looking to boost liquidity by increasing its exposure to bonds and cash.
Media reports of the KIA turning to bonds and cash are probably conjecture at this stage, as the Authority does not publicly disclose its investments or detailed strategy. Report of the shift in investment, if proven, are a rare insight into the strategy of one of the world’s biggest sovereign wealth funds. According to the Sovereign Wealth Fund Institute, which monitors the largest wealth funds operated by countries, the KIA is estimated to manage over US$590 billion of assets.
The report said KIA made “calculated exits” from investments it felt were vulnerable to a downturn in global financial markets as the world economy began to show signs of faltering two years ago.
The International Monetary Fund (IMF) in July cut its forecast for global growth this year and next, warning that further tariffs in the US-China trade dispute or a disorderly British exit from the European Union could slow growth further, weaken investment and disrupt supply chains. The IMF said that downside risks had intensified and it expected global economic growth of 3.2 percent in 2019 and 3.5 percent in 2020, both down by 0.1 percentage points from its April forecasts and its fourth downgrade since October.
In late 2017, Kuwait News Agency, the official mouthpiece of the government, made the rare statement that KIA had more than $300 billion of investments in the United States, diversified among stocks, bonds, real estate and technology. The fund’s investments are reportedly spread across more than 120 economies globally.
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