The CEO of Qatar’s sovereign wealth fund believes that if the world experiences a recession, it will be “light”.
Growing fears of a looming recession briefly pushed U.S. stocks into a bear market on Friday, as China’s Covid-19-related shutdowns, rising interest rates and a cost-of-living crisis impact on investor sentiment.
“The sell-off that we see (is) embedded in all the bad scenarios that we talk about. So we’re talking about recession, inflation and geopolitical issues,” Qatar Investment Authority CEO Mansoor Al Mahmoud told Hadley. CNBC’s Gamble. Davos.
The QIA, which manages $450 billion in assets, is ranked the ninth largest sovereign wealth fund in the world, according to the Sovereign Wealth Fund Institute.
Al Mahmoud said he was “less pessimistic” despite the current state of the global economy as it recovers from the pandemic. “We are in better shape in terms of the banking sector which has a good balance sheet, we have good liquidity,” added the CEO. “I’m not saying we won’t have a downturn, I’m not saying we might not have a recession, but if we have a recession it will be a mild recession.”
Qatar at the service of Europe’s energy transition
As Germany seeks to wean itself off Russian energy, Chancellor Olaf Scholz hailed Doha’s important role in Berlin’s transition, agreeing to an “energy partnership” after the Qatari emir’s visit. Qatar aims to start LNG deliveries by 2024.
The QIA chief told CNBC: “We cannot stop investing in Europe, we will help them towards the energy transition. Of course, during this year they could have difficulties, because the price (of the energy) does not help Europe’s growth.”
He also praised Germany’s efforts for renewable energy sources, saying that “they are very advanced (in) their transition”.
Despite QIA’s commitment to Europe, the fund is unsure whether investments will see an immediate return with the current energy crisis weighing on growth. “I (am) really optimistic for Europe in about three to five years,” Al Mahmoud said.
A post-pandemic strategy
The QIA, once focused on trophy assets like property, including holdings in the London Stock Exchange and the Grosvenor House Hotel, shifted focus after the pandemic and is investing more in technology.
A QIA affiliate is contributing $375 million to Elon Musk’s takeover of Twitter, according to official documents released on May 5. The redemption is currently suspended. The QIA chief could not comment on the deal on Twitter, but praised Musk’s leadership.
The fund also has important ties to Moscow. The QIA reportedly has $9 billion in assets in Russia with stakes in St. Petersburg airport and Russian energy giant Rosneft.
Al Mahmoud told CNBC that the fund is “not divesting,” adding that the QIA is “fully compliant with international sanctions” and that “we have lower exposure to Russia compared to the overall portfolio we have.” The fund, Al Mahmoud said, has no plans to deploy more investments in Russia.