MANAMA: Middle East sovereigns are slightly more optimistic about the end of the economic cycle with 33 per cent expecting the cycle to end within one to years, according to 2019 Invesco Global Sovereign Asset Management Study.
The study is an annual in-depth report on the investment behaviour of sovereign wealth funds and central banks, with insight into their opportunities and challenges faced.
As many as 78pc of ME sovereigns expect a soft landing, while increasing allocations to illiquid alternatives is particularly prominent for sovereigns based in the Middle East, with 38pc increasing allocations to real estate, 66pc private equity and 75pc infrastructure (against 29pc, 27pc and 36pc for the overall sample).
Middle East investors also intend on increasing allocations to Asia - 75pc increased allocations in 2018 compared to 47pc for the overall sample.
A further 75pc plan to increase allocations in 2019 (against 40pc across the sample). The second key theme uncovered by the study was 'Investing at Scale.
Among Middle East investors, 88pc have exposure to China (73pc for all), and within this sub-group all report having exposure to equities and real assets, but only 29pc invest in fixed income (versus 39pc of total sovereigns).
Investment risk is seen as the biggest challenge to investing in China - cited by 88pc, compared with 40pc across the sample.
US-China tensions are influencing asset allocation decisions for 67pc (compared to 82pc for the overall sample) while Brexit is influencing allocations for 78pc (against 64pc for the full sample).
All Middle Eastern investors surveyed hold infrastructure assets, with development objectives the most important driver for 38pc (compared with 12pc across the sample).
The results of the study represent the views of 139 sovereign funds and central banks across the globe, managing $20.3 trillion in assets.
This is a significant study with 71 central banks and 68 sovereign funds taking part in this year's survey.
The survey has grown over the years in size and depth in terms of a number of respondents and depth of insight.
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