Riyadh will liquidate assets faster than Gulf peers

Subject

Prospects for Gulf Arab sovereign wealth funds.

Significance

Lower oil prices since 2014 have hit Gulf Cooperation Council (GCC) sovereign wealth funds (SWFs) to different degrees. The impact in Saudi Arabia has been especially marked. All the funds, however, face the challenge of retaining or increasing the returns and liquidity of their assets and professionalising their management.

Impacts

• Gulf SWFs will witness a long-term decline in importance relative to non-commodity SWFs in Asia.
• Saudi Arabia’s Public Investment Fund (PIF) could buck the trend of increasingly professionalised management.
• Diversification into new asset classes will open new opportunities for international partnerships.
• Foreign asset managers pitching for business in the Gulf will have to present higher-quality proposals as SWFs become more selective.