Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a senior banker estimates, as plummeting oil prices and the coronavirus pandemic hit state finances.
The rapid spread of the virus has ravaged the global economy, sending markets into a tailspin and costing both oil and non-oil based sovereign wealth funds around $1 trillion in equity losses, according to JPMorgan strategist Nikolaos Panigirtzoglou.
His estimates are based on data from sovereign wealth funds and figures from the Sovereign Wealth Fund Institute, a research group.
Sticking with equity investments and risking more losses is not an option for some funds from oil producing nations. Their governments are facing a financial double-whammy – falling revenues due to the spiraling oil price and rocketing spending as administrations rush out emergency budgets.