Saudi investment fund PIF ‘has $300bn in assets and counting’

Saudi Arabia’s Vision 2030 reform plan is expected to transform the country’s key wealth fund into one of the world’s largest sovereign investment vehicles. (Shutterstock)
Updated 10 June 2019
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Saudi investment fund PIF ‘has $300bn in assets and counting’

  • Boost in Kingdom’s wealth fund ‘will improve country’s international investment position,’ study shows

LONDON: Saudi Arabia’s key wealth fund has about $300 billion in assets and its growing size is set to “improve the country’s international investment position,” a new report has found.
Roughly a quarter of the Kingdom’s Public Investment Fund (PIF) holdings are overseas, with investments in companies like electric car maker Tesla and SoftBank’s Vision Fund, according to the Institute of International Finance (IIF) analysis. 
A raft of privatization deals and the planned $69 billion sale of a controlling stake in petrochemicals giant Saudi Basic Industries (SABIC) to Saudi Aramco is set to further boost the fund’s coffers, according to the IIF.
That means it is likely PIF will hit a target of $400 billion in assets by 2020, something the fund’s representatives have previously suggested is on track. 
“The expected further increase in the PIF’s assets abroad will improve the country’s international investment position,” the IIF report said.
“We now estimate PIF’s assets at about $300 billion, of which one-fourth are invested abroad, including in … Blackstone’s infrastructure fund, Egypt’s investment fund, Russia’s investment fund, and Uber. Proceeds from privatization (a target of about
$200 billion) and the eventual 5 percent sale of Aramco (a target of $100 billion) will further boost the PIF’s assets.”
However, the IIF noted that the privatization drive has been delayed due to legal impediments, concerns about implications for the labor market, and — in the case of the planned sale of a 5 percent stake in Saudi Aramco — regulatory procedures that need to be addressed.
The Vision 2030 reform plan envisions the transformation of the PIF into one of the world’s largest sovereign investment vehicles, managing $2 trillion by 2030. 
The Sovereign Wealth Fund Institute estimates PIF’s current assets at $320 billion, higher than the IIF’s assessment, making the Saudi entity the 10th largest fund of its type globally. Representatives of PIF did not immediately respond to a request for comment. 
The IIF report also found that Saudi Arabia’s holdings of US government bonds climbed to a peak of $170 billion in March 2019. The Kingdom has also “repositioned” its assets from euro and UK pounds to US dollars, the institute said.
“The increase in the Saudi appetite for US bonds coincided with relatively higher US yields and unfavorable investment sentiment in (emerging markets) and the euro zone,” the report noted.


FedEx confirms Huawei mail ban as new “mistake” reignites Chinese ire

Updated 46 sec ago
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FedEx confirms Huawei mail ban as new “mistake” reignites Chinese ire

  • The incident comes as Chinese authorities investigate FedEx for misrouting packages sent by Huawei last month

FedEx Corp. has apologized for another Huawei delivery “mistake,” reigniting Chinese ire and drawing the fire of state media which suggested the US delivery firm could end up on China’s upcoming list of companies that harm national interests.
The firm on Sunday said it returned a package — identified as containing a Huawei phone — due to an “operational error,” and that it would deliver all products made by Huawei Technologies Co. Ltd. to addresses other than those of Huawei and affiliates placed on a US national security blacklist.
China’s foreign ministry on Monday nevertheless asked for a full explanation. Technology news outlet PCMag, formerly known as PC Magazine, reported https://www.pcmag.com/news/369155/are-huawei-phones-now-banned-from-themail that its writer in Britain had attempted to send a Huawei P30 handset to a colleague in the United States. Fedex returned the phone and told the sender that it could not deliver the package because of a “US government issue” with Huawei and the Chinese government, PCMag reported.
The incident comes as Chinese authorities investigate FedEx for misrouting packages sent by Huawei last month. Meanwhile, China is also drawing up an Unreliable Entities List of foreign firms, groups and individuals.
The list mirrors the US Entity List that Huawei was added to in May, essentially barring it from buying US technology upon which it was heavily reliant. The US added more Chinese entities to the list on Friday.
The Beijing News, a municipal government-run newspaper, in an editorial on Monday, said FedEx had misinterpreted the US ban and called on US firms to be “rational” and not to over-react.
FedEx rival United Parcel Service Inc. also confirmed it would not ship to Huawei addresses on the Entity List but had no “general ban” on Huawei products.
A Huawei spokesman said the Chinese firm was not currently using either FedEx or UPS services. On Sunday, Huawei tweeted it was not within FedEx’s right to prevent the delivery and said the courier had a “vendetta.”

Unreliable
The latest incident sparked renewed criticism of FedEx on Chinese social media, with the topic “FedEx apologizes again” trending on Weibo, China’s Twitter-like microblog platform.
State-run newspaper Global Times on Sunday tweeted that FedEx is likely to be added to China’s Unreliable Entities List.
Neither China’s commerce ministry nor FedEx responded to Reuters’ requests for comment on the likelihood of FedEx being added to the list. State news agency Xinhua previously said authorities’ investigation into FedEx misrouting Huawei packages should not be regarded as retaliation.
Being in the “crosshairs” of the Chinese government “is a tremendous headwind and risk” for FedEx, Trip Miller, said managing partner at Memphis-based Gullane Capital Partners, which holds a FedEx position valued at roughly $7 million.
“Can you imagine if FedEx was banned from doing business? China could get our attention pretty quick if it did something like that,” said Miller, adding that such a move would significantly disrupt global trade networks.
FedEx’s operational error comes against a backdrop of increasing tension between the world’s two biggest economies. The United States and China have been engaged in a trade fight for nearly a year on issues such as tariffs, subsidies, technology, regulations and cybersecurity.
A telephone call between US President Donald Trump and Chinese President Xi JinPing last week, as well as confirmation the two will meet in Japan on the sidelines of a Group of 20 summit, have rekindled hopes of a detente.