Mideast Investors Seeking Opportunities in Europe

Mideast Investors Seeking Opportunities in Europe

Middle East sovereign investors have piled into European companies in the wake of the coronavirus disease (COVID-19) pandemic, according to an Invesco survey.

Sovereigns in the Middle East were more likely to look to Europe for bargains over the next 12 months, with 38 percent increasing their exposure to emerging Europe and the same proportion to developed Europe.

"The market turmoil in March and April saw asset prices fall considerably, especially as some investors sold securities to ensure liquidity,“ said Zainab Kufaishi, head of the Middle East and Africa at Invesco. "This presented opportunities to gain exposure to 'blue-chip' companies at good prices.“

Sovereign wealth funds in the Gulf are among the biggest in the world. Invesco said many were well prepared for the COVID-19 crisis, which it called an "unprecedented buying opportunity.“

Funds, it added, had learned the lessons from the 2008 financial crisis, which included building large cash reserves and making organizational improvements for managing liquidity.

At the end of 2019, even before COVID-19, Middle Eastern sovereign funds were cautious. Their average equity allocations as an overall proportion of the portfolio were 16 percent, compared to 26 percent for their peers globally.

Looking forward, 43 percent of Middle East sovereigns said they planned to