(Bloomberg) --
Persistently high inflation in the U.S. tops the list of concerns for one of Abu Dhabi's biggest sovereign wealth funds even as growth prospects remain strong.
“You worry about things like inflation. You worry about how that's going to play out over the next six to 12 months,” Mubadala Investment Co's deputy chief executive officer, Waleed Al Mokarrab Al Muhairi, said in an interview at Bloomberg Invest.
Global markets have been thrown into turmoil in recent weeks, partly due to concerns about persistently high inflation and disruptions to international supply chains, with investors bracing for the Federal Reserve to begin tapering pandemic stimulus as early as next month.
Al Muhairi said he didn't expect immediate tightening, with rising prices likely to remain the key risk for Mubadala, which has over $232 billion of assets and invests in private and public securities. The U.S. is one of its key markets.
“I would say for the next couple of quarters, you're going to see pretty accommodative policy, whether it's fiscal or whether it's monetary,” he said. “But at the same time, we always think about what the rainy day looks like. In this case, inflation is an important element of that rainy day.”
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China Investments
Beyond the U.S., Mubadala is still investing in China and sees opportunities in the live sciences sector.
Chinese markets have come under pressure amid a government crackdown on various sectors from technology to property and tutoring as part of President Xi Jinping's campaign for “common prosperity.” The China Evergrande Group debt crisis has also added a level of uncertainty.
“I think you need to be careful, I think you need to rethink a little bit what risk-reward looks like,” he said, but Mubadala was still investing because of “tremendous” opportunities. “It still looks very, very attractive to me.”
“You can't ignore the massive economies in Asia. You can't ignore the growth hot spots around the world, whether it's China, India, or other places. And so clearly our portfolio has to reflect that, otherwise we are literally missing out on opportunities.”
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