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Motives Behind GCC Sovereign Wealth Funds’ Investment in Foreign Securities and Their Role in Regional Capital Markets’ Integration

  • Ibrahim A. OnourEmail author
Conference paper
Part of the Lecture Notes in Networks and Systems book series (LNNS, volume 91)

Abstract

To capture the long-run association between major GCC stock markets and foreign exchange reserves of Saudi Arabia, UAE, and Qatar at post-international financial crisis of 2008, we employed multivariate cointegration analysis (As there is no foreign debts payable by these countries, change in foreign exchange reserves of these countries can be a good proxy for change in their sovereign wealth funds (SWFs)). Our findings suggest an evidence of long run association between the foreign exchange reserves and the stock markets’ prices. To assess risk attitude of GCC Sovereign Wealth Funds (SWFs) we further investigated cointegration between one of the biggest GCC SWF (SAMA fund) investment in foreign securities, and Dubai and Qatar stock markets prices before and after the global financial crisis. Our results indicate, while there is no significant evidence of common co-movements between change in the stock markets prices and SAMA fund before the financial crisis, there is a strong evidence of co-movements at the post-financial crisis era. This result implies an evidence of risk aversion attitude of SAMA fund, as opposed to the finding of other studies that associate primary motive of GCC SWFs with political influence on host countries.

Keywords

GCC Sovereign wealth funds Capital markets 

JEL Code

G1 G11 G21 G32 

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Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Department of Business AdministrationUniversity of KhartoumKhartoumSudan

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