Saudi Arabia Crown Prince Mohammed bin Salman has been trying to diversify the kingdom’s financial holdings.
Photo: Jacquelyn Martin/Press PoolSaudi Arabia’s sovereign-wealth fund has sold shares valued at over $5.5 billion in several major multinational corporations just months after buying into them as the financial fallout from the coronavirus pandemic weighed on global stock-market prices.
At the same time, the roughly $300 billion Public Investment Fund chaired by the kingdom’s powerful Crown Prince Mohammed bin Salman, invested nearly $4.7 billion in exchange-traded funds focused on the real-estate, utilities and materials sectors, a U.S. filing showed.
PIF unloaded stakes worth more than half a billion dollars each in companies like Boeing Co., BA 1.92% Facebook Inc. and Marriott International Inc., MAR -0.50% according to a filing with the Securities and Exchange Commission.
It had picked up the minority stakes in big corporates in the first quarter, highlighting a strategy of piling into global stocks even as the novel coronavirus and a crash in oil prices mean that Saudi Arabia’s financial position is now the most precarious in a decade.
The filings showed that in the second quarter PIF also sold positions in U.S. banks Citigroup Inc. and Bank of America Corp., as well as European energy firms BP PLC, Royal Dutch Shell PLC and Total SA, while buying more shares of cruise operator Carnival Corp. and concert promoter Live Nation Entertainment Inc.
Many of the stocks PIF targeted in the first quarter were trading at historic lows, bruised by the fallout from the coronavirus and rock-bottom oil prices that have battered stocks of energy companies. U.S. markets have broadly recovered in recent months, but it wasn’t clear from the sales information provided in the filing what sort of gains or losses PIF realized on its trades.
Tarek Fadlallah, chief executive of Nomura Middle East, the regional asset-management arm of the Asian investment bank, said the latest moves were unexpected.
“This suggests that the PIF is taking a more opportunistic ‘trading’, rather than a traditional strategic ‘buy-and-hold’ approach of most other SWFs,” he said in an email.
Prince Mohammed, the kingdom’s day-to-day ruler, tasked PIF in 2015 with diversifying the country’s economy away from oil by investing in companies and industries untethered to hydrocarbons.
While PIF has dipped into stocks in recent years, it has focused more on private equity, allocating capital to managers such as SoftBank Group Corp. Its record is mixed. The fund’s $45 billion investment in the Vision Fund has suffered losses, and the value of its pre-listing investment in Uber Technologies Inc. of $3.5 billion is also currently down.
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