From Petrodollars to Petropennies: What assets are sovereign wealth funds going to sell?

One of the explanations of the recent turmoil in equity markets is the selling of assets by Sovereign Wealth Funds of countries highly dependent on oil revenues, like Kuwait and Saudi Arabia.

Many of these countries have used oil revenues to fund social welfare costs. In fact, revenues were so high that the excess earnings were placed in Sovereign Wealth Funds and excesses like sports teams. At the beginning of 2015 the oil-producing nations together held about $4 trillion in assets in their Sovereign Wealth Funds[1]. Top of the list are countries like Norway, U.A.E./Abu Dhabi and Saudi Arabia holding approximately over $600 billion each[2].

At this point, many investors worry that the current low oil prices might lead to a sell-off by these Sovereign Wealth Funds. Others say the sell-off is already in full swing[3]. The head of the sovereign wealth fund of Kazakhstan was even fired after mentioning to The Wall Street Journal that their fund will run out of money in seven years as oil prices cut its revenue. An important question of course remains which assets are these funds going to sell if oil prices remain low and what countries/ sovereign wealth funds will be hurt the most from these low oil prices.

The infographic below shows which countries are most dependent on oil revenue according to the oil revenue as  a percentage of GDP, the Oil Production Costs and the Fiscal Break-Even point at which oil prices needs to be to balance the government’s budget. Furthermore, we have tried to retrieve the holdings of Sovereign Wealth Funds.  With regards to the Norwegian Government Pension Fund (NIBM), all holdings per country and asset class at December 31, 2014 are visualized. From the Abu Dhabi Investment Authority their strategic regional allocation and asset class allocation is available, while Australia’s Future Fund only shows its allocation by region.

The visualization has four dashboards.

Oil overview: visualizes the oil revenue/ GDP, oil production costs and fiscal break even oil prices. At the right of the view, users can make selections and apply filters. The “Factor Y-axis” and “Factor X-axis” filters only apply to the scatterplot view which can be selected in the top right corner.

Norway: shows the holdings of the Norwegian Government Pension Fund Global

Australia: presents the holdings of the Australia Future Fund

Abu Dhabi: shows the strategic holdings of the Abu Dhabi Investment Authority

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