Interpreting Middle East Economic News and Analyzing Market Trends

Kuwait government investments are approaching $800 billion, much larger than previous estimates

IFSWF 2014

Bader Al-Saad (center), Chairman of the Kuwait Investment Authority (KIA)

 

On October 22, 2014, Kuwaiti newspaper Alrai published figures from a report it had received detailing the Kuwaiti government’s finances and investments.  In it, the report states that the government’s total investments are valued at $782 billion as of June 30th this year.  Total investments are expected to top $800 billion by the end of the year.  This figure is much higher than previous estimates reported by the media.

 

 

The Sovereign Wealth Fund Institute puts the total size of the Kuwait Investment Authority’s investments at $410 billion.  The latest figures published by Alrai include government investments and assets held by the KIA as well as other government entities.  Details of these other entities were not disclosed.  The full story is available here in Arabic only.

 

Kuwait Investment Holdings - Alrai 22-10-2014

Kuwait government investments by type. Source: Alrai Media

 

It’s interesting to see that 46%, or $258.5 billion, of the government’s investments are in cash, demand deposits and other short-term holdings.  I wonder which banks are handling this cash.  My guess would be the big global banks, which have huge derivative exposures and are hugely under-capitalized. The risk is high that the Kuwaiti government may never see this money again when once these banks run into trouble again.  A Cyprus-style bail-in would be a sweet deal for the banks holding this cash.

 

The KIA is the oldest sovereign wealth fund.  For a good read on the organization check out Where in the World is the Kuwait Investment Authority? published on June 27, 2014 in CIO.