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(Bloomberg) — An investment firm controlled by a top Abu Dhabi royal has built up short positions in U.S. stocks worth billions of dollars, betting that heightened recession fears will bring markets closer to home, people familiar with the matter said. pressure.
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The group took a more negative view on stocks earlier this year and shifted more of its portfolio into short-term U.S. Treasuries, said the people, who asked not to be identified because the matter is private. The firm, chaired by Sheikh Tanub bin Zayed Al Nahyan, the United Arab Emirates national security adviser, is also ramping up investments in commodities and cryptocurrencies, they said.
The conglomerate, which helps manage one of the world’s largest family fortunes through a sprawling network of subsidiaries, plans to pour as much as $10 billion into U.S. and European stocks and other assets that have been hit hard by fears of a global economic slowdown, Bloomberg reported in October. .
The company profited from some of its investments in the U.S. market late last year and has been revising its list of U.S. stocks to buy, the people said. The group will seek to increase its exposure to the U.S. once valuations improve and the Fed signals it is ready to cut rates, they said.
It is unclear which stocks or sectors Royal Group is shorting. Company officials did not respond to a request for comment.
Royal Group’s holdings include stakes in unlisted companies, making it difficult to gauge the size of its assets. The Sovereign Wealth Fund Institute, which tracks entities around the world, values ​​its assets at about $170 billion, including a stake in International Holdings, the UAE’s largest listed company. Royal Group does not disclose the total value of its holdings or the amount it has allocated to the stock market.
influential player
Until recently, Sheikh Tahnoon’s firm has prioritized investing in developing countries. With money drying up in many markets around the world, Royal Group is emerging as an influential player in global finance and has become a key tool in the oil-rich Gulf state’s diversification strategy.
READ: Shares of world’s richest family soar 28,000% to $300 billion
The group is hoping to capitalize on shaky market sentiment following the collapse of four U.S. banks and growing expectations of a global economic slowdown. Stocks have traded sideways since early April as better-than-expected corporate earnings offset concerns about a possible recession and the health of regional banks. Still, the S&P 500 is up about 7% this year.
Bloomberg Economics expects the U.S. to slip into recession in July — two months earlier than previously expected — as a potential credit crunch and higher oil prices could further dent growth and push up inflation.
Abu Dhabi has been consolidating more assets under the company umbrella, cementing Sheikh Thanoon’s status as the royal family’s top businessman under his older brother, UAE President Sheikh Mohammed bin Zayed.
Earlier this year, he became chairman of the $790 billion Abu Dhabi Investment Authority, cementing his power over positions such as the United Arab Emirates’ national security adviser and head of the country’s largest bank, First Abu Dhabi Bank PJSC.
(Update details of Royal Group assets in sixth paragraph.)
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