Capital outflows from the UAE public sector entities, including sovereign wealth funds, rose to Dh95 billion in 2011 from Dh10 billion in 2010, Central Bank data suggests.
High oil prices last year boosted UAE’s total hydrocarbon exports to Dh409.9 billion, up 50 per cent from Dh274.1 billion in 2010. The country’s current account surplus rose to Dh292 billion from Dh180 billion, the recently released central bank annual report said.
Analysts said the jump in capital outflows last year likely reflected higher overseas investments by the leading sovereign wealth funds. These include Abu Dhabi Investment Authority, or Adia, which invests the emirate’s surplus oil income in overseas markets, and by other wealthy government-owned investment vehicles such as the International Petroleum Investment Co, which invests in oil and gas ventures overseas, and Mubadala Development Co, which leads the Abu Dhabi government’s diversification strategy away from the oil and gas sector.
According to the latest ranking by the US-based Sovereign Wealth Fund Institute, or SWFI, Adia topped the list of the world’s sovereign wealth funds, or SWFs, with an estimated $627 billion of assets.
The SWF Institute, which tracks the wealth funds’ assets on a quarterly basis, said SWF assets rose 9.6 per cent in 2011 over 2010, up from $4.4 trillion in December 2010 to $4.8 trillion in December 2011.
SWFs from the UAE, China, Norway and Saudi Arabia are in the top four places. While China’s main sovereign fund, SAFE Investment Company, was ranked second, with $567.9 billion in assets, Norway’s government pension fund came in third with $560 billion.
According to Giyas Gokkent, chief economist at the National Bank of Abu Dhabi, Adia invests mostly in the US and Europe. According to Adia’s annual report for 2010, the latest available, external fund managers manage some 80 per cent of the wealth fund’s assets. Adia has divisions specializing in equities, fixed income, real estate, alternative investments, private equity and infrastructure.
Mohammed Ali Yasin, a UAE-based economist, cautioned that not all the Dh95 billion of capital outflows last year reflected overseas investments. Some of the outflow might reflect debt repayments or other commitments by the UAE public sector entities, he said.
The net investment income of the UAE public sector enterprises rose 14 per cent to Dh25.1 billion last year, from Dh22 billion in 2010, the central bank report said.
Capital outflows from the UAE public sector entities peaked in 2007 at Dh175.8 billion, before dropping to Dh108.2 billion in 2008 and only Dh20.0 billion in 2009, according to previous central bank reports.