DUBAI (Reuters) – The Qatar Investment Authority (QIA), the energy exporter’s $50 billion sovereign wealth fund, said on Monday it was diversifying away from the weakening U.S. dollar by investing more in Asia.
The QIA, which has offered to buy British supermarkets chain J. Sainsbury Plc, is eyeing investments in countries such as Japan, China, South Korea and Vietnam, Kenneth Shen, the agency’s head of strategic and private equity, said in Dubai.
The remarks offered a rare insight into the strategy of one of the secretive funds that control an estimated $800 billion in Gulf Arab government assets after a tripling of oil prices in the past five years.
Both the U.S Treasury and the International Monetary Fund said in June they were uneasy about the growing power of such sovereign funds within the world’s financial system.
The QIA wants to diversify its portfolio because most of the country’s revenues are denominated in dollars, the currency in which Qatar’s customers pay for oil and gas. Dollar assets are the largest component of the QIA’s portfolio followed by the euro, yen and sterling, Shen said told a conference.
“Part of the challenge is that since our assets, gas and oil, are clearly denominated in dollars, we are looking to diversify away from that,” he said, when asked about how the QIA was compensating for dollar weakness.
“Historically we have been investing mostly, or principally, in the United States and North America. So the strategy in terms of diversifying away from the dollar further…is to be investing outside of the United States, outside of Europe, into markets which are not as exposed to the dollar,” he said.
Shen later told Reuters the QIA was not reducing the size of its dollar holdings.
Central banks in the world’s largest oil-exporting region are reducing exposure to the dollar, which hit a record low against the euro in July.
The central banks of Qatar and the United Arab Emirates said last year they planned to increase their euro holdings, while Kuwait’s central bank dropped the dinar’s peg to the dollar this year and adopted a basket of currencies to contain imported inflation.
The QIA plans to increase exposure to Asia, Shen told reporters.
The agency expects most growth in alternative energy, financial services and consumer-related businesses, he said.
The QIA’s Delta Two fund has offered to buy Sainsbury for 10.6 billion pounds ($21.4 billion).
Shen declined to comment on that acquisition, but said credit market turmoil triggered by mortgage defaults in the United States had reduced the price of assets.
“It has created tremendous opportunities for us. Things that were a bit pricey before are looking more interesting for us,” he said.
The QIA, which refuses to disclose the value of its portfolio, manages about $50 billion in assets, Washington-based Peterson Institute for International Economics estimated in a report last month.
The Abu Dhabi Investment Authority, which manages surplus revenues of the world’s sixth-largest oil exporter, has at least $500 billion in assets, according to the report.
The Kuwait Investment Authority had about $213 billion on March 31, according to official figures.