Saudi sovereign wealth fund buys $7-bn US stocks amid recession fears

Saudi Arabia’s sovereign wealth fund invested more than $7 billion to build new positions in US stocks including Amazon.com Inc., Alphabet Inc., BlackRock Inc. and JPMorgan Chase & Co. as markets were battered by recession fears.

The $620 billion Public Investment Fund also added to positions it held in Facebook Inc. owner Meta Platforms Inc., PayPal Holdings Inc. and Electronic Arts Inc. in the second quarter, according to a 13F filing. The acquisitions show that the PIF, as the fund is known, is doubling down on its bet on technology investments despite a rout in valuations.

Chaired by Crown Prince Mohammed bin Salman, the PIF is plowing deeper into public markets as it pursues the goal of more than doubling its assets by 2025. The wealth fund is boosting its investments in equities as Saudi Arabia’s income from oil almost doubled in the second quarter. Soaring crude prices are set to give the kingdom its first budget surplus in almost a decade. 

The PIF’s most recent buying spree echoes the fund’s strategy in early 2020 when it spent billions snapping up stakes in US firms whose valuations had been battered by the onset of the coronavirus pandemic. It then sold many of those stakes when markets rebounded. 

Recession Fears

The S&P 500 index sank 16% during the second quarter, while the Nasdaq 100 dropped about 22% over concerns that rate hikes by the Federal Reserve risked tipping the US economy into recession. Since then, the S&P index has gained about 14%. 

In total, the value of the PIF’s disclosed portfolio in the US fell by about $3 billion in the second quarter to roughly $40 billion, according to information from the filing that was compiled by Bloomberg. Much of the drop was due to an $8.3 billion decline in the value of the PIF’s stake in electric car-maker Lucid Motors, which slumped after it cut production targets.

As well as buying about $482 million of shares in Starbucks Corp. and roughly $496 million in Costco Wholesale Corp., the PIF also pushed deeper into tech stocks, joining Abu Dhabi wealth fund Mubadala Investment Co. to become a go-to investor in the sector. 

The PIF invested about $522 million in Datadog Inc. and roughly $2 billion in Electronic Arts Inc. during the second quarter, according to the filing.

Most of what’s known about the PIF’s holdings comes from regulatory filings. The fund itself discloses limited information publicly about its allocations to different geographies or asset classes.