The Kuwait Investment Authority is cautious about investing in bank shares in both the American and European financial markets, given the sector’s recent volatility and instability, resulting in exposures and bankruptcies of several banks.
This cautionary approach stems from the effective conservative policy pursued by the executive management of the sovereign fund.
The Authority had rejected offers to own shares in international banks previously, leading to a crisis, and recent research has validated this rejection.
Despite achieving lucrative returns in its global and European market investments this year, the Authority plans to reduce banking investments and focus on sectoral diversification while compensating for the reduced bank investments in other sectors.
The reservation policy emphasizes a measured and staged approach for investing in bank shares with stable financial conditions, adhering to specific standards, controls, and technical conditions to ensure stable returns with minimal risk.
The Authority is open to seizing opportunities presented by financially stable entities and partnerships with international institutions. However, it remains mindful of the evolving global scene and influences surrounding it. The Authority will exit any unproductive investments, prioritizing maximizing revenues from foreign investments within a competitive framework and established stability standards.
In managing its portfolios, the Authority emphasizes promising performance, taking into account general market indicators and implementing a risk-measurement policy to mitigate potential shocks.
The portfolios consist of assets belonging to the Future Generations Fund, with a 50 percent allocation to American financial market shares and investments, outperforming the market index from the beginning of the year until the end of July. The remaining 50 percent is diversified across European and foreign stock exchanges, with strategic re-allocation based on each market’s performance.
The Authority’s movements and investments are based on thorough studies and recommendations from international consulting bodies, ensuring a well-considered approach rather than random decision-making.
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