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Zawya
2 days ago
- Business
- Zawya
Middle East Sovereign Investors recalibrate strategies amid geopolitical uncertainty and market shifts
Fixed income and private credit gain importance as Middle East sovereign wealth funds (SWFs) manage liquidity and diversify exposures Middle East SWFs prioritise China with 60% planning to increase allocations over the next five years Middle East SWFs cautiously increase direct digital asset exposure while navigating regulatory challenges Dubai, UAE – Political and policy decisions have become core drivers of investment strategy, prompting sovereign investors to fundamentally reassess portfolio construction and risk management, according to the thirteenth annual Invesco Global Sovereign Asset Management Study Geopolitical tensions (84%) remain the dominant short-term risks for sovereign wealth funds (SWFs) and central banks in the region, followed by a fallout from the Middle East conflict (68%). An overwhelming majority (96%) of respondents believe that geopolitical rivalry will be a key driver of volatility, while 91% expect protectionist policies to entrench persistent inflation across developed economies. Most notably, 52% of Middle East SWFs now see deglobalisation as a material threat to investment returns, underscoring a marked shift in the market narrative. Invesco's study, a leading indicator on sovereign investor behaviour, draws on the insights from 141 senior investment professionals, including chief investment officers, heads of asset classes, and portfolio strategists, from 83 SWFs and 58 central banks across the world, collectively managing $27 trillion in assets.* Active strategies gain traction alongside foundational passive exposure One of the key shifts in portfolio construction identified in the study is the greater use of active strategies by respondents. On average, Middle East SWFs maintain 78% of their equities portfolio and 77% of their fixed income portfolio in active strategies. The survey shows that 33% of SWFs in the region are planning to increase active equity exposures over the next two years, with 50% doing the same with fixed income. While passive strategies continue to provide efficiency and scale benefits, particularly in highly liquid public markets, active approaches are being used to address index concentration risks, navigate regional dispersion, and enhance scenario resilience in an increasingly fragmented landscape. At the same time, portfolio construction decisions such as asset class, geographic, and factor tilts are increasingly viewed as core expressions of active management. Fixed income redefined and reprioritised Due to a combination of geopolitical shifts and interest rate normalisation, traditional portfolio construction models are being rethought, with many SWFs turning to more dynamic portfolio approaches that includes more fluid asset allocations, enhanced liquidity management, and greater use of alternatives. Within this landscape, fixed income has assumed a new importance within SWF portfolios, becoming the second-most favoured asset class behind infrastructure. On a net basis, 30% of Middle East SWFs plan to increase their fixed income exposure over the next 12 months. 'Amid geopolitical uncertainty and market shifts, investors across the Middle East are recalibrating their strategies,' says Josette Rizk, Head of Middle East and Africa at Invesco. 'Active asset management is growing in prominence due to its adaptability to a rapidly evolving economic environment. While private credit holds on to its popularity, fixed income has rebounded as the region's SWFs diversify exposures.' Private credit takes centre stage as a new diversification tool Private credit continues to gain momentum among SWFs in the Middle East, with 63% accessing the asset class through funds and 50% making direct investments or co-investments. The survey indicates that 50% of SWFs worldwide, including 40% of those based in the Middle East, plan to increase allocations to private credit over the next year. This growing interest reflects a broader rethinking of diversification as traditional stock-bond correlations erode in a higher-rate, higher-inflation environment. Sovereign investors are turning to private credit for floating-rate exposure, customised deal structuring, and return profiles that are less correlated with public markets. Once considered a niche asset class, private credit is now viewed as a strategic pillar of long-term portfolio construction. China remains a high priority in a fragmented emerging market landscape SWFs are taking a more selective approach to emerging markets. Asia (excluding China) is a high priority for 43% of respondents worldwide and 25% in the Middle East. Meanwhile, China is once again an important focus for 28% SWFs globally and 33% in the Middle East, with 60% of the region's SWFs expecting to increase China allocations over the next five years. SWFs are increasingly orientating their China strategies around specific technology sectors, such as AI, semiconductors, EVs, and renewables, with 80% of respondents in the region believing the country's technology and innovation capabilities will become globally competitive in the future. 'Middle East SWFs are focusing a large proportion of their portfolios on Asian economies,' adds Rizk. 'Based on the outcomes of our study, we anticipate rising investment flows between the Middle East and China, with higher growth potential in selected sectors.' Active management is viewed as essential in this environment. Just 25% of Middle East SWFs rely on passive emerging market (EM) strategies, while 73% access EMs through specialist managers, citing the need for local insight and tactical flexibility. Digital assets, continued exploration Digital assets are no longer seen as an outsider topic among institutional investors. This year's study shows a small but notable increase in the number of SWFs that have made direct investments in digital assets – 11%, compared to 7% in 2022. Allocations are most common in the Middle East (22%), Asia Pacific (18%), and North America (16%), in contrast with Europe, Latin America, and Africa, where they remain at 0%. For Middle East SWFs, the biggest barriers to investing in digital assets include regulatory challenges (100%) and volatility (86%). 'Investors are increasingly open to exploring the value digital assets may add to their portfolios,' says Rizk. 'In the Middle East, allocations are growing cautiously as investors balance new opportunities with regulatory challenges and market volatility.' Globally, central banks are simultaneously advancing their own digital currency initiatives, balancing innovation potential against systemic stability considerations. While no central bank respondents in the Middle East have launched a digital currency yet, 33% are considering it, viewing efficiency in payments (100%) and enhanced financial inclusion (44%) as the biggest benefits of central bank digital currencies (CBDCs). Central bank resilience and gold's defensive role Central banks are reinforcing their reserve management frameworks in response to mounting geopolitical instability and fiscal uncertainty. In the Middle East, 67% plan to increase their reserve holdings over the next two years, while 27% intend to diversify their portfolios. Gold continues to play a critical role in this effort, with 63% of central banks in the region expecting to expand their gold allocations over the next three years. Seen as a politically neutral store of value, gold is increasingly viewed as a strategic hedge against risks such as rising U.S. debt levels, reserve weaponisation, and global fragmentation. At the same time, central banks are modernising how they manage gold exposures. In addition to physical holdings, an increasing number are turning to more dynamic tools, such as exchange-traded funds (ETFs), swaps, and derivatives, to fine-tune allocations, improve liquidity management, and enhance overall portfolio flexibility without sacrificing defensive protection. This is expected to continue, with 21% of central banks globally and 25% in the Middle East saying they plan to hold investments in gold ETFs in the next five years, while 19% worldwide and 25% in the region intend to hold gold derivatives. About Invesco Ltd. Invesco is a global independent investment management firm. Our distinctive investment teams deliver a comprehensive range of active, passive and alternative investment capabilities. With offices in more than 20 countries, Invesco managed $1.84 trillion in assets on behalf of clients worldwide as of March 31, 2025.
Times of Oman
2 days ago
- Business
- Times of Oman
India's forex reserves dip $3.06 bn to $696.67bn, second straight weekly decline
Mumbai: India's foreign exchange reserves fell by USD 3.06 billion to USD 696.67 billion for the week ending July 11, marking the second straight week of decline, according to the official data released by the Reserve Bank of India (RBI). In the previous reporting week of July 4, the country's forex reserves witnessed a slip of USD 3.049 billion to USD 699.736 billion. In the week ending July 11, foreign currency assets, which are the major constituent of the forex reserves, fell USD 2.477 billion to USD 588.81 billion, possibly becoming the major reason for the fall in the forex reserves. The Gold reserves, another major component of the forex, again witnessed a sharp fall of USD 498 million to USD 84.348 billion. The country's Special Drawing Rights (SDRs) with the global financial body, the International Monetary Fund (IMF), saw a dip of USD 66 million to USD 18.802 billion during the reporting week of July 11, according to the RBI data. The Reserve Position in the IMF also decreased by USD 24 million, according to the data. Central banks worldwide are increasingly accumulating safe-haven gold in their foreign exchange reserves kitty, and India is no exception. The share of gold maintained by the Reserve Bank of India (RBI) in its foreign exchange reserves has almost doubled since 2021, till recently. In 2023, India added around USD 58 billion to its foreign exchange reserves, contrasting with a cumulative decline of USD 71 billion in 2022. In 2024, the reserves rose by a little over USD 20 billion, touching an all-time high of USD 704.885 billion at the end of September 2024. India's foreign exchange reserves (Forex) are sufficient to meet 11 months of the country's imports and about 96 per cent of external debt, said Governor Sanjay Malhotra while announcing the outcome of the Monetary Policy Committee (MPC) decisions. The RBI governor expressed confidence, stating that India's external sector is resilient and key external sector vulnerability indicators are improving. Foreign exchange reserves, or FX reserves, are assets held by a nation's central bank or monetary authority, primarily in reserve currencies such as the US Dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling. The RBI often intervenes by managing liquidity, including selling dollars, to prevent steep Rupee depreciation. The RBI strategically buys dollars when the Rupee is strong and sells when it weakens.
Gulf Business
7 days ago
- Business
- Gulf Business
World Gold Council: Gold prices rise 26% in H1; see outlook for H2
Image: Getty Images/ For illustrative purposes Gold surged 26 per cent in the first half of 2025, notching 26 all-time highs and outperforming major asset classes as investors flocked to the safe-haven metal amid a weaker US dollar, stagnant bond yields, and mounting geopolitical tensions, according to the The WGC report, titled 'Downhill or Second Wind?' , explores whether gold has peaked or still has room to run in the second half of the year. It projects that gold could rise a further 0 per cent to 5 per cent under current consensus expectations. However, deteriorating macroeconomic conditions, including stagflation or recession, could drive gold prices up another 10 per cent to 15 per cent, while widespread conflict resolution may lead to a 12 per cent to 17 per cent decline. 'Gold has continued its record-setting pace, rising across all major currencies, and showing remarkable strength in the face of a volatile global backdrop,' the WGC report stated. Strong demand, ETF flows H1 2025 saw average daily gold trading volumes reach a record $329bn, bolstered by robust over-the-counter activity, exchange-based trading, and renewed inflows into gold-backed ETFs. Global ETF assets under management surged 41 per cent to $383bn, with holdings rising by 397 tonnes to 3,616 tonnes – the highest since August 2022. Central banks maintained strong buying momentum, though slightly below record levels, continuing the trend of diversification away from U.S. dollar holdings. The WGC's attribution model indicates that opportunity cost factors, such as a weakening dollar and stagnant yields, contributed 7 per cent to gold's return, while risk and uncertainty added 4 per cent. Dollar falters, gold gains The 'Trade-related geopolitical risks played a large role, not just directly, but by fuelling moves in the dollar, interest rates, and broader market volatility – all of which fed into gold's appeal,' the report noted. H2 scenarios: range-bound or breakout? Consensus forecasts suggest below-trend global growth and persistently high inflation in the second half, with US CPI expected to reach 2.9 per cent. The Federal Reserve is anticipated to cut interest rates by 50 basis points by year-end. Under this base case, gold is expected to consolidate with potential modest gains. The WGC warns that more severe scenarios – such as intensified stagflation, recession fears, or escalated geopolitical tensions – could prompt a stronger rally. Conversely, a return to economic stability and easing geopolitical risks could lead to reduced investment flows into gold and a steeper pullback. Even in a bearish scenario, however, the WGC sees $3,000/oz as a natural support level, noting that lower prices could revive consumer demand and discourage recycling. Outlook: Structurally resilient While the report acknowledges the unpredictable nature of the global macro environment, it concludes that gold remains well-positioned as a strategic asset. 'Given the intrinsic limitations of forecasting the global economy, we believe gold – through its fundamentals – remains well positioned to support tactical and strategic investment decisions in the current macro landscape,' it said. At the end of June, gold stood at $3,287/oz, with a record high of $3,434 reached on June 13.
bnok24
11-07-2025
- Business
- bnok24
Governor of the Central Bank of Egypt Signs Memorandum of Understanding with Chinese Counterpart to Promote Mutual Cooperation
In a significant step to strengthen banking and financial ties between Egypt and China, H.E. Mr. Hassan Abdalla, Governor of the Central Bank of Egypt (CBE), signed a Memorandum of Understanding (MoU) with H.E. Mr. Pan Gongsheng, Governor of the People's Bank of China (PBOC), at the Egyptian Cabinet to boost joint collaboration across various areas of mutual interest. The signing ceremony was witnessed by H.E. Dr. Mostafa Madbouly, Prime Minister of Egypt, and H.E. Mr. Li Qiang, Premier of the State Council of the People's Republic of China, alongside senior officials from both countries The MoU includes a cooperation framework through the exchange of information and professional expertise, as well as the training and development of staff at both central banks. The areas of cooperation encompass monetary policy, financial markets, electronic payment systems and services, financial and supervisory technologies, in addition to banknote issuance The MoU aims to promote the use of local currency settlements for cross-border financial and trade transactions, while facilitating direct investments between both sides to foster economic integration. It also includes provisions to strengthen cooperation on Central Bank Digital Currencies (CBDC). Additionally, it supports financial innovation using modern technology through conducting joint research and studies, as well as exchanging technical information and expertise In this regard, H.E. Mr. Hassan Abdalla, Governor of the CBE, affirmed that 'this MoU reflects the evolution of the historic ties between Egypt and China. It demonstrates both institutions' commitment to strengthening partnerships between their respective financial institutions in light of global economic developments.' He also expressed his optimism regarding this step, which is expected to elevate economic cooperation to more advanced and effective levels For his part, Mr. Pan Gongsheng, Governor of the PBOC, stated that 'the signing of this MoU marks a pivotal step in advancing economic relations between Egypt and China,' emphasizing that 'this agreement will facilitate the sharing of best practices and regulatory coordination in both jurisdictions, creating an enabling environment to unlock greater potential of bilateral financial cooperation Google News تابعونا على تابعونا على تطبيق نبض CBEGovernor of the Central Bank of Egypt جاري التحميل ...
bnok24
06-07-2025
- Business
- bnok24
Central Bank of Egypt Hosts a Training Program on Micro and Macro Stress Testing for COMESA Central Banks
In line with the presidential directives to promote Egyptian-African integration, and within the framework of ongoing cooperation between the Central Bank of Egypt (CBE) and the COMESA Monetary Institute (CMI), the CBE hosted a five-day training program on 'Micro and Macro Stress Testing for Central Banks' at the Egyptian Banking Institute (EBI) in Cairo This program reflected the CBE's leading role in achieving integration among African central banks. The training program included 28 participants representing 11 Central Banks from COMESA Member States, along with a delegation from the CMI. The sessions featured discussions, practical examples, and the sharing of expertise on micro and macro stress testing using standard models. Moreover, the training covered applications of stress testing tools in credit risk, liquidity, climate change, and interbank contagion risks On this occasion, Dr. Naglaa Nozahie, the Governor's Advisor for African Affairs, emphasized the importance of such training programs in enhancing the capacity of Central Banks to address crises and assess systemic risks. She also underscored the CBE's commitment to building the capacity of Central Banks' staff across Africa and strengthening joint cooperation with countries across the continent, particularly within the COMESA region. This marked the 12th consecutive year of training programs provided by the CBE for COMESA Central Banks' staff Furthermore, Dr. Ahmed Sahloul, the Assistant Sub-Governor for the Macroprudential Sector at the CBE, highlighted the significance of conducting micro and macro stress tests to assess the effects of various macro-financial and geopolitical shocks on the banking sector's performance and resilience. Moreover, stress tests can be employed to assess the impact of emerging risks, such as climate change and cybersecurity risks. Ultimately, the stress tests results can be used to guide policymakers to implement appropriate measures that strengthen the role of the banking sector in financial intermediation, and thereby safeguarding financial stability From his side, Dr. Lucas Njoroge, Director of COMESA Monetary Institute, expressed his gratitude to the CBE for its continuous contribution to building the capacities of COMESA Central Banks, highlighting the Institute's aspiration for further collaborations with the CBE in the coming years The training program, which encompassed lecturers from the Offsite Supervision and Macroprudential sectors, featured interactive sessions for the exchange of expertise among representatives of COMESA Central Banks. These sessions aimed to address current challenges and potential solutions, as a practical exercise in applying stress tests and their regulatory frameworks within central banks At the end of the program, a set of proposals and recommendations were formulated to deepen the understanding of how stress tests can enhance the operations of COMESA Central Banks. These recommendations will be discussed at the level of central bank governors during their upcoming annual meeting in 'Uganda' in November 2025 Google News تابعونا على تابعونا على تطبيق نبض
