Kuwait's $250 billion (£126.42 billion) sovereign wealth fund may boost its stakes in Citigroup and Merrill Lynch.

"The valuation in the markets in the US and Europe, we think, has created a lot of opportunities," said Bader al-Saad, managing director of the Kuwait Investment Authority (KIA), adding that the fund had confidence in the management of the two Wall Street firms.

The KIA took a $3 billion stake in Citigroup and invested $2 billion in Merrill in January as the banks strove to rebuild their subprimeravaged balance sheets.

Al-Saad said his fund had turned its attention away from developing markets to the US and Europe as valuations fell, but emphasised that this was "a temporary shift".

He said he was concerned about the threat of recession in the US and predicted the nation's economic recovery will "take longer than everybody expected".

While this will impact on Chinese and Indian growth, Al-Saad did not think it would drive them into recession.

"Asia will continue to be attractive," he said. "Vietnam will be more attractive than the others."

Growing sovereign fund investment has raised concerns in the US and Europe about their influence on sensitive industries.