PIF maintains US holdings as giga-project demand eases

• PIF US equities down $2bn
• Largely due to lower share prices
• FedEx holding down to 0.72m

US equity holdings of the Saudi Public Investment Fund (PIF) showed little change in the third quarter, as recently revised foreign direct investment figures eased pressure on it to support the kingdom’s giga-projects. 

PIF total ownership in US equities slipped to $36.48 billion from $38.93 billion in the second quarter, according to a PIF filing this week with the US Securities and Exchange Commission. 

The most notable shifts were a cut in PIF’s shareholding in courier service FedEx, raising its holding in Chinese online retailer Pinduoduo and taking a position in Italian fashion firm Ermenegildo Zegna. 

• PIF investment to boost local energy sector supply chains
• Assessing Saudi Arabia’s Vision 2030 progress
• PIF in talks to invest $250m in Chinese EV company

PIF almost halved its FedEx holding to 0.72 million shares, but raised its stake in Pinduoduo by 45 percent to 1.7 million shares, and acquired 2.16 million shares in Ermenegildo Zegna. 

But James Swanston of Capital Economics said the total value was mainly reflective of lower share prices rather than changes in volume of holdings, since PIF had made few alterations overall. 

This suggests sovereign wealth fund PIF is not under pressure to lower its foreign holdings to support Saudi Arabia’s mammoth development plans. Projects such as Neom and Amaala were valued recently at a total $1.25 trillion. 

The government along with Russia pushed through a policy of Opec+ oil output cuts over the past year in an effort to drive oil prices up, providing PIF with funds for the giga-projects – seen as key to diversifying the economy away from oil and raising Saudi employment. 

Saudi international reserve assets dropped 3 percent month on month to SAR1.59 trillion ($420 billion) in October, and were down 8 percent over the year after hitting a high of 1.77 trillion in November 2022 when oil was at a high because of the Ukraine war. 

Analysts suggested PIF was funnelling foreign currency reserves into the giga-projects. 

Swanston said the ministry of investment’s revised FDI figures released this month would be good news for PIF: “There is possibly less pressure than otherwise thought on PIF to support local investments.”

The new figure was $33 billion in 2022, more than quadrupling a previous estimate of $8 billion released by the United Nations Conference on Trade and Development (Unctad), ranking Saudi Arabia 10th amongst G20 economies last year. 

But the figure still lags behind a target of $100 billion a year the government published in 2021 in its revised FDI investment strategy.

“If FDI struggles to get toward the Vision 2030 target… then PIF may be leant on more heavily and have to reduce its holdings abroad in order to fund local investments,” Swanston said.