GCC funds reiterate deeper economic ties with Russia

on Feb 28, 2022
Updated: Mar 4, 2022
  • QIA and M뫚la have no near-term plans to divest exposure to Russia.
  • Rachel Ziemba says Gulf states want to continue working with Russia.
  • UAE recently abstained on a United States’ backed resolution on Ukraine.

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Two of the largest Middle Eastern sovereign wealth funds have no plans in the near-term to divest exposure to Russian assets, anonymous sources told Bloomberg on Monday.

Mubadala and QIA funds have sizable stakes in Russia

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Abu Dhabi’s Mubadala Investment Co and Qatar Investment Authority are under no pressure to cut their investments in Russia, the report added. Mubadala values its exposure to Russia at roughly $3.0 billion while QIA has a 19% stake in Rosneft.

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According to the people familiar with the matter, neither of the two funds is likely to make a move that could hurt its long-term strategic relationship with Moscow. Both Mubadala and QIA haven’t made official comments on the report so far.

The report comes shortly after Norway’s $1.30 trillion oil fund said it was divesting exposure to Russia in response to the Ukraine war.

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UAE abstained on a United Nations’ resolution on Ukraine

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The GCC investors have been allocating more to Russian assets in recent years, as part of a broader strategy to strengthen economic ties with Moscow. As per Rachel Ziemba – the founder of NY-based advisory firm Ziemba Insights:

It’s a part of a broader attempt by Gulf states to continue working with Russia where there are mutual interests. They’re trying to balance the risk of secondary sanctions with their long-term relationships. Norway’s fund is subject to direct government restrictions and significant popular sentiment; two things the GCC funds are insulated from.

On Saturday, UAE joined China, Pakistan, and India, and abstained on a United States’ backed resolution on Ukraine. This morning, the British oil giant, BP plc withdrew from its stake in Moscow-headquartered PJSC Rosneft Oil Company.

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