From: Reuters
Published November 18, 2007 09:53 AM

Abu Dhabi's $650 bln fund eyes emerging markets: HSBC

By James Cordahi

ABU DHABI (Reuters) - The $650 billion Abu Dhabi Investment Authority is seeking to invest more in emerging markets to get higher returns than from its European and U.S. assets, a senior executive of banking group HSBC said on Sunday.

The world's largest sovereign wealth fund has traditionally invested in U.S. Treasuries and other fixed-income assets.

It has discussed emerging market investments with HSBC, according to Youssef Nasr, the bank's chief executive officer in the Middle East.


"The returns that you get in either the United States or Europe are not going to be as high as you get in emerging markets," Nasr said at an investment conference organized by the London-based Middle East Economic Digest.

"They are asking for some more help as far as these emerging markets are concerned," he said.

Standard Chartered estimated in September that the Abu Dhabi Investment Authority, which manages the surplus funds of the world's sixth-largest oil exporter, had $650 billion in assets, among nearly $1 trillion controlled by Gulf Arab sovereign wealth funds.

Concerns that these funds and state investors in Asia could shift away from U.S. assets are partly behind the dollar's slide this month to a record low against the euro, a 26-year trough against sterling and an 18-month low against the yen.

Qatar's $60 billion sovereign wealth fund, the Qatar Investment Authority, has cut its exposure to the dollar by more than half to around 40 percent of its portfolio in the past two years, the country's prime minister said on October 2.

In September, Kenneth Shen, the Qatar Investment Authority's head of private equity, said in Dubai it was diversifying away from the weakening U.S. dollar by investing more in Asia.

The Kuwait Investment Authority (KIA), which said it had at least $213 billion in assets on March 31, decided in 2005 to double its allocation for Asia to 20 percent of its portfolio.

The KIA is looking to invest in eastern Europe, Australia, Russia and Asian markets such as China and Vietnam, Executive Director Saleh al-Sagoubi said in July.

(Editing by David Holmes)

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