Having lost out on buying stocks on the cheap during the global financial crisis, Saudi Arabia’s sovereign wealth fund wasn’t going to make the same mistake twice. So, when the coronavirus pandemic sent markets into a tailspin, it was all geared up.
The fund received a $40 billion transfer from the nation’s reserves in March so it could take advantage of the crash in markets, buying stakes in companies including Citigroup Inc., Facebook Inc. and cruise-ship operator Carnival Corp. By the end of June it had sold most of those stakes and switched to holding about $7 billion in exchange traded funds.
“When the coronavirus emerged, we didn’t only look at the U.S. markets, we looked at all international markets,” Al Rumayyan said. “We entered some U.S., European and Asian markets. We stayed in some, and we left some.”
Local Push
The fund is set to play a major role investing in local development projects over the next few years as the government looks to cut spending to keep the budget deficit in check.
The fund is committed, at least in 2021 and 2022, to investing 150 billion riyals ($40 billion) a year at home, Al Rumayyan said. This figure will increase annually until 2030, and could reach about 200 billions riyals a year in subsequent years, he said.
Just five years ago the PIF, as it’s also known, was a relatively sleepy, domestically focused fund with less than 100 employees. It now has 1,000 staff and ambitions to control 10 trillion riyals, Al Rumayyan said.