UPDATE 2-Kuwait’s KIA says no plans to cut euro zone exposure

* KIA denies newspaper report of cut-back of euro assets

* No change in KIA’s strategy including Europe

(Recasts with KIA’s statement)

KUWAIT, May 27 (BestGrowthStock) – Kuwait Investment Authority
(KIA), the country’s sovereign wealth fund, said on Thursday it
did not plan to reduce its exposure to euro zone investments,
denying a Kuwaiti newspaper report.

“KIA denies local newspaper reports that there is a
consideration by (KIA) to reduce its investments and presence in
European countries … as a reaction to crises that some
European countries are facing,” KIA said in an emailed

Citing sources familiar with the matter, Kuwaiti newspaper
Al-Anba had said on Thursday that the sovereign fund was
planning to reduce investments in the euro zone on fears another
crisis involving Portugal and Spain was lurking.

The paper added that KIA’s economic reports “confirmed the
escalation” of the crisis in Greece, which could lead to new
debt problems for the two other European states.

KIA holds a stake in Germany’s Daimler (DAIGn.DE: ) and is a
majority stakeholder in telecom firm Zain (ZAIN.KW: ).

KIA invested about $750 million in U.S. asset manager
BlackRock (BLK.N: ) last year, and said in January it was eyeing
investments in Asia and Latin America in 2010. [ID:nLDE60U03U]

In December, KIA sold its $3 billion stake in Citigroup Inc
for a profit of $1.1 billion.

The authority said in the statement that it was a long-term
investor and there was no change to its investment strategy
including in the euro zone.

Steffen Kern, economist at Deutsche Bank and a sovereign
wealth fund expert, said he viewed any substantial currency
restructurings by sovereign funds on the basis of recent
economic events in Europe as premature.

“Most sovereign wealth funds have a time frame of well
beyond 10 years in their portfolio investments. Based on that,
the current economic developments do not warrant a significant
shift,” he said.

Kern said portfolio diversification, particularly currency
diversification, has been a major priority for sovereign funds,
and expected it to remain a key focus going forward.

“I expect that they will take a prudent approach,” he said,
adding that despite the seriousness of fiscal problems in some
euro zone countries he expected the European Union and its
member states to manage and see growth prospects back on track
in the medium- to long-term.

Stock Market Report

(Reporting by Eman Goma, Tamara Walid and Dinesh Nair in Dubai;
Editing by Toby Chopra)

UPDATE 2-Kuwait’s KIA says no plans to cut euro zone exposure