Saudi Wealth Fund Cuts Foreign Investments to Support Local Economy
Saudi Arabia’s Public Investment Fund (PIF) is preparing to reduce its foreign investments by approximately one-third, according to fund manager Yasir Al-Rumayyan at a conference held in Riyadh on Tuesday. PIF aims to shift its focus toward local economic growth and reduce its international investments from the current 30% to 18-20%.
Valued at $925 billion, PIF is a key instrument in Crown Prince Mohammed bin Salman’s strategy to diversify the Saudi economy away from traditional oil dependency. The fund has played a significant role in financing a range of "mega projects" aimed at developing new industries and creating sustainable revenue streams. However, Al-Rumayyan noted that some of these projects have been scaled back due to rising costs.
The announcement was made at the annual Future Investment Initiative (FII) summit in Riyadh, which serves as a platform for Saudi Arabia's largest companies and their relations with PIF. This year's event is seen as an indicator of investor interest in Saudi Arabia amid concerns about potential conflicts in the Middle East.
Al-Rumayyan emphasized a strategic shift in PIF's investment approach toward establishing joint ventures with both international and local companies rather than just direct investments. This approach is exemplified by the decision to establish a regional hub in Riyadh's King Abdullah Financial District (KAFD), as noted by Mizuho Bank's CEO Masahiko Kato.
Saudi Arabia's investment minister Khalid Al-Falih announced that the number of foreign companies with regional headquarters in the country has exceeded the 2030 target of 500, reaching 540. This milestone highlights the Kingdom's attractiveness as a regional business center.
Energy Minister Prince Abdulaziz bin Salman reiterated the commitment to maintain Saudi Arabia’s oil production capacity at 12.3 million barrels per day, emphasizing the importance of oil to the national economy.
Notable speakers at the FII summit included Moderna CEO Stephane Bancel, Alphabet (NASDAQ: GOOGL) Chair and CIO Ruth Porat, and CEOs from major banks such as Citi, Goldman Sachs, and Morgan Stanley (NYSE: MS). The summit addressed topics like artificial intelligence, the U.S. presidential election, and economic forecasts, with minimal focus on regional conflicts.
Elon Musk, attending the conference via video link, spoke about the future of artificial intelligence and space exploration. He predicted that humanoid robots, which could significantly increase Tesla's value, might be priced between $20,000 and $25,000 by 2040. Musk views the Optimus Robot, currently in development by Tesla, as a transformative product for the company.
One week before the U.S. presidential election, Citadel CEO Ken Griffin noted that markets are predicting Donald Trump will win against Democratic Vice President Kamala Harris, while Blackstone CEO Steve Schwarzman expressed his belief that Trump has developed a deeper understanding of the presidency.
Bank executives at the summit expressed optimistic views about an increase in corporate deals next year. Morgan Stanley CEO Ted Pick forecasted a rise in global initial public offerings, while Goldman Sachs CEO David Solomon anticipated stronger activity.
Inflation concerns were also a topic of discussion. Many executives, including BlackRock CEO Larry Fink, acknowledged that inflation might have become more entrenched in the global economy than previously thought, suggesting a reevaluation of central bank policies may be necessary.