Estimates of an annual study showed that the heavy losses incurred by stock and bond markets over the past year led to a decrease in the combined value of sovereign wealth funds and public pension funds around the world for the first time ever, by regarding $2.2 trillion.
The Global SWF platform report on state-owned investment tools included that the value of assets managed by sovereign wealth funds fell to $10.6 trillion from $11.5 trillion, while the value of assets of public pension funds fell to $20.8 trillion from $22.1 trillion.
Diego Lopez of Global SWF said the main driver was “simultaneous and large” corrections of 10 percent and more in the major bond and equity markets, a combination not seen in 50 years.
This came at a time when Russia’s invasion of Ukraine had sent commodity prices soaring and inflation, which was already rising to its highest level in 40 years. To deal with these developments, the US Federal Reserve and other major central banks raised interest rates, which led to heavy selling in the global markets.
“These are book losses and the role of some funds as long-term investors will not be affected by them… but they make it clear to us exactly where we stand,” Lopez said.
Despite all the turmoil, the money spent by the funds to acquire companies, real estate or infrastructure jumped 12 percent compared to 2021.
The report predicted that sovereign funds in the Gulf region, such as the Abu Dhabi Investment Authority, Mubadala and Holding (ADQ), the Public Investment Fund and the Qatar Investment Authority, would become more active in buying Western companies following receiving huge financial inflows from oil revenues during the past year.
