For the next six months, the Qatar Investment Authority will literally do nothing. According to Hussein al-Abdullah, executive director of the QIA, they will only add “doing something” to the agenda in the second half of 2009–at which point they will begin a review of the SWF’s investment strategy. After the hiatus and the review, it is anticipated that QIA will refocus investment activity towards “commodities, food, energy and water”. Clearly, the QIA (like many other SWFs) has suffered considerable losses in the financial crisis and simply wants to take a step back and re-evaluate.
As perhaps the longest-term investors in the world, SWFs are better able to “do nothing” than their institutional cousins (pensions, endowments, etc) that have pressing liabilities. Nevertheless, with distressed assets trading at significant discounts, QIA could better use the next few months by buying up illiquid asset classes that are currently under-priced due to the prevalent liquidity concerns; over the long term, these illiquid investments could turn a nice profit. Nevertheless, of the available options, doing nothing is a better choice than buying high and selling low–a fate many pension plans currently find themselves confronting.
Perhaps the QIA is ready to make a splash again, specifically by buying voting shares in Porsche. It will be interesting to see how German regulators respond to this development given their opposition to SWFs in general, that will only be amplified by the interest in voting shares.
http://www.nytimes.com/2009/06/20/business/global/20iht-porsche.html?ref=global-home