Gulf sovereign funds kept deploying through the Iran war, mostly into developed markets — even as official reserve managers eased off the dollar. Today's Capital Flow Watch: where Gulf capital went, the split inside the Gulf, and what a fragmenting "safe haven" means for allocators. (1) The Gulf didn't flinch; (2) ADIA and PIF lean emerging; (3) Reserve managers ease off the dollar. Full brief: universalassetowners.com
Transcript
This is the Universal Asset Owners daily video brief for Thursday, June fourth. Three things for the people who allocate long-horizon capital.
The Iran war was supposed to slow the Gulf's sovereign funds. It didn't. Global SWF's June report finds the six GCC funds — about five point seven trillion dollars — held their pace through the war, with most capital flowing into developed markets, chiefly the US. Mubadala alone put more than five point six billion into developed markets.
But the Gulf isn't one bloc. The two biggest funds broke from the crowd. Saudi Arabia's P-I-F put six point one billion into emerging markets, and Abu Dhabi's ADIA three point three billion — even as their peers crowded into US assets. When the largest balance sheets take the contrarian side, the consensus deserves a second look.
Now the counter-current. OMFIF found the dollar falling in central banks' demand rankings, with about seventy percent citing the US political environment. In March, foreign official institutions net-sold fifteen billion dollars of Treasuries — even as private investors bought a hundred and eleven billion. A public-versus-private split in who finances America.
Here's the picture. Mubadala, QIA and L'imad poured into developed markets. ADIA and PIF leaned the other way, into emerging markets. The Gulf's money is moving fund by fund — not as a single tide.
Here's our take. The Gulf's US buying and the official sector's dollar diversification aren't contradictory — they're the same signal from two seats. The same Treasuries are a diversifier for one owner and a concentration risk for another. The haven is defined by your liabilities, not the instrument.
The full brief, the chart, and The Universal Owner podcast are at universalassetowners dot com. Back tomorrow.
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Produced and edited by the UAO editorial desk. Not investment advice.