GCC funds reiterate deeper economic ties with Russia

on Feb 28, 2022
Updated: Mar 4, 2022
  • QIA and Mubadala 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.

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

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.

UAE abstained on a United Nations’ resolution on Ukraine

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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