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

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

The $620bn Public Investment Fund also added to positions it held in Facebook owner Meta Platforms, PayPal Holdings and Electronic Arts 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 per cent during the second quarter, while the Nasdaq 100 dropped about 22 per cent 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 per cent.

In total, the value of the PIF’s disclosed portfolio in the US fell by about $3bn in the second quarter to roughly $40bn, according to information from the filing that was compiled by Bloomberg. Much of the drop was due to an $8.3bn 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 $482m of shares in Starbucks and roughly $496m in Costco Wholesale, 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 $522m in Datadog and roughly $2bn in Electronic Arts during the second quarter, according to the filing.