The Kuwait Investment Authority has followed precautionary measures to deal with Kuwait’s investments in the Russian market since the onset of the crisis with Ukraine, reliable sources revealed to an Arabic paper. The move was aimed at mitigating the consequences of recent developments on Kuwaiti investments in the country, as well as, to abide by required standards.
In addition, the Investment Authority instructed its global portfolio managers to follow a conservative policy when dealing with its holdings in shares listed on the Moscow Stock Exchange, with a value of about $200 million, especially after the Russian market was excluded from the “MSCI” index, against its ongoing dispute with Ukraine. The sources pointed out that the deposit of these investments are in private accounts, which have been completely isolated and frozen, and not traded by sale or increased in investment centers. This decision shall take effect until the recovery or the lifting of the ban on Russian banks, which came in light of the Western sanctions imposed on Moscow, so that the Investment Authority can exit from those investments or take appropriate action at the time.
Sources also emphasized that it is currently challenging to transfer any sums or funds invested in Russia by the portfolios owned by the Investment Authority, and managed by international institutions. But the relevant team at the government agency is monitoring any political developments through its global managers, in preparation for taking the necessary decisions when the situation is stable.
It was also mentioned that the Investment Authority is keeping abreast with the latest updates on the global situation and its impact, noting the increase in its investments in some European markets to compensate for the Russian market’s exit from the global index. Note that these properties were negatively affected by the situation involving the Russian market in light of military operations in Ukraine.
The Investment Authority was also said to have investments represented in three stakes in operational projects in Russia, including projects in the industrial and energy sectors. Sources said that these investments are stable and maintain regular operations. There are a few holdings in stocks listed in the country, which is almost close to zero. The plans include seizing opportunities with a long-term vision, through specialised institutions and entities, while taking into account the changing weight of markets on global indices.
As per the effects of the Investment Authority’s foreign investments on the reserves, the sources said, “Things are very good, and we are achieving a balanced performance, and we have not resorted to any exits in state-owned assets during the recent period to cover our obligations,” noting that there are stakes in various companies and investments in the Gulf and Arab markets that witnessed positive development recently.
The source stressed that the growth achieved by the shares and properties of the Investment Authority in the global and regional markets would have a significant impact on its investments, as well as, on the Reserve Fund for Future Generations (FGF), as the price of oil soars up and the increase in its revenues enables the state’s general budget to exceed the deficit with government agencies fulfilling their monthly obligations.
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