The Qatar Investment Authority's perfect storm

Whichever way you cut it, the third quarter wasn’t a classic one for the Qatar Investment Authority (QIA). In fact, it could hardly have been worse. A series of the sovereign wealth fund’s sizeable stakes performed well below par, headed by Volkswagen’s implosion over diesel emissions, and investor concerns about Glencore’s debt. From Shell to Barclays, and from Siemens to Agricultural Bank of China, the roll-call of paper losses has stacked up.

Making matters worse, CITIC Group — the Chinese conglomerate with which the QIA has plans to jointly invest $10bn into Asia — has been the subject of a damaging investigation by the Chinese government, which believes subsidiary CITIC Capital has been engaged in insider trading.

But there’s no need to reach for the violins just yet. The QIA’s mandate is “to create long-term value for the State and future generations” — its bankers do not view its investments on a quarterly basis. And while the paper loss seems significant, it is by no means the worst performance by a large sovereign wealth fund this year.

n August alone, for example, the Government Pension Fund of Norway — the world’s biggest — lost about 5 percent of its value as Asian markets, spooked by falls in China, hit the skids. That translates to around $40bn, which puts the QIA’s performance into some perspective. The bigger you are, the harder you fall when the markets turn against you.