Forecast: Assets of sovereign funds in Persian Gulf to be reduced by $296 bn this year


April 22, Fineko/abc.az. A drop of 20-25% in the securities market leads to asset depreciation and increased spending by sovereign funds in the fight against the pandemic.

ABC.AZ reports that the above-said statement was made by Vusal Gasimli, the executive director of the Center for Analysis of Economic Reforms & Communications.

He noted that JPMorgan estimates that under the influence of the global pandemic, sovereign wealth funds in the world have suffered capital losses of about $1 trillion.  According to Gasimli, it is predicted that the assets of sovereign funds in the Persian Gulf will decrease by $296 bn by the end of this year: "The world's largest sovereign fund, the Pension Fund of Norway, lost $113 bn in the 1st quarter of this year, which is almost 3-fold more than the volume of the State Oil Fund of Azerbaijan (SOFAZ). As a result of global shocks, the negative difference in Q1 of 2020 because of short-term fluctuations in the market value associated with the revaluation of SOFAZ assets amounted to AZN 2.1 bn. As over 80% of SOFAZ investment portfolio consists of liquid and consistently profitable instruments, it is possible to minimize the impact of global shocks on the Fund's assets. At the same time, the fact that 66% of the Fund's investment portfolio is in US dollars, and the real effective exchange rate of this currency has increased by 8.5% since early 2020, is important for the value of assets. By the way, the real effective exchange rate of the euro, in which SOFAZ keeps 22.8% of its finances, has risen by 3% since the beginning of the year."