Some of the biggest investors in the Persian Gulf are dodging Iranian missiles on a daily basis – but they are also still doing deals, On The Money has learned.
US financiers who broker investments for the Abu Dhabi Investment Authority, the Saudi Public Investment Fund, the Kuwait Investment Authority and Qatar Investment Authority are still at work despite the ongoing war, sources close to the situation say.
Yes, their priorities may now be shifting to how best to build out infrastructure devastated by the attacks, but I am told their long-term goals remain intact, including their diversification away from energy and into places like tech and AI.
Collectively, these sovereign funds control trillions of dollars and they’re some of Wall Street’s biggest customers. That’s why American financiers have been so focused on their activities since they became the somewhat surprising targets of the Ayatollahs.
“Somewhat surprising” is the operative term because Qatar has maintained decent relations with the mullahs over the years, although the Saudis have largely been rivals. In any event, sources tell me they were all prepared for something big to go down weeks before the actual bombs started flying based on their own intelligence.
What they weren’t planning on necessarily was to be hit with Iranian drones and missiles. That was the reason for the rather late cancellation, just last week, of the April Formula 1 Grand Prix in Bahrain and Saudi Arabia.
In the meantime, it’s business as usual – at least to the degree that it can be in a war zone.
“The people at the sovereign wealth funds are all working from home since it’s still Ramadan,” the holiest month on the Islamic calendar that ends later this week, one hedge fund executive told me.
“But they are going out at night for dinners and business meetings,” the source added. “Everyone is just hoping this ends in the next few weeks.”
Most of the Gulf states, Qatar included, now want Iran leadership and military defanged, which will present plenty of investment opportunities. Gaza, where Hamas once enjoyed significant Iranian support, may get big bucks from the sovereigns if the terror group loses power and is replaced by moderates.
All the sovereign wealth funds — which are charged with managing the Gulf states’ vast coffers – have been diversifying away from oil and natural gas. Expect that to continue, and for them to build out infrastructure such as pipelines so they aren’t forced to transport all their oil through the Straits of Hormuz near the Iranian mainland.
If the war ends favorably, for example with severely weakened Mullahs still in charge but no longer bombing oil tankers, crude could fall pretty hard from the $100-plus a barrel it’s trading at today. That means the diversification of the Gulf economies into tech and other businesses will ramp up.
And if the war doesn’t end any time soon? Well, the Gulf states have too much money just to sit on their hands – particularly when oil is selling at its highest prices in years.
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