Saudi Arabia's Public Investment Fund targets China

Saudi Arabia's Public Investment Fund outlines its strategy to direct investments to China. The United States and Europe had so far been the main target of its foreign acquisitions.   

As reported by Bloomberg, the Saudi fund has applied for a Qualified Foreign Institutional Investor License in China.   

According to the published information, the license will give the fund the ability to avoid working through third parties, trading shares directly in renminbi, China's official currency.    

The Arab country intends to develop economic relations by investing its sovereign wealth fund in the Chinese market.  

So far, China is Saudi Arabia's largest trading partner, as well as the main customer of Aramco, an oil company headed by Yasser al-Rumayyan, governor of the Public Investment Fund.  

China is already the world's second largest economy and has become a reference country for Saudi investment as well, due to the fact that the Russian government is investing the resources of the National Investment Fund (NIF) in Chinese Executive bonds in yuan.

This seems to respond to a strategy to avoid possible sanctions that Russia believes may come from the United States.  

As a result of Russia's move to replace the dollar in trade agreements, it acquired a quarter of the world's yuan reserves.  

In a bid to become a global investment powerhouse, the Saudi wealth fund aims to seize $2 trillion in assets.     

After activity grew in 2015, the fund has bought a stake in Uber Technologies worth $3.5 billion, and invested $45 billion in SoftBank's largest technology investment fund, as measures to raise its global profile.   

It recently did the same by backing automaker Lucid through a deal with a buyout firm.

It also bought stakes in late June last year worth $10.1 billion in companies such as The Walt Disney Company and British Petroleum, both of which are listed in the U.S., selling most of them later as markets rose.   

Earlier, he also bought small stakes in U.S.-listed Boeing, Facebook, and Citigroup.  

Later, the value of the stake in Boeing amounted to $713.7 million, approximately $522 million stake in Citigroup, also $522 million in Facebook, a nearly $500 million stake in Disney, and finally another stake worth $487.6 million in Bank of America.

In the aftermath of the coronavirus pandemic crisis, the fund has been able to take advantage of market weakness, buying minority stakes in large companies around the world, and managing assets worth more than $400 billion.   

The Saudi fund also owns other stakes in Marriott worth approximately $514 million, another small stake in Berkshire Hathaway, and a stake in the oil company BP, worth approximately $827.7 million.  

In April last year, the fund also disclosed a stake in Carnival Corp of 8.2%, which was hit hard by the coronavirus crisis, sending the cruise operator's shares up by about 30%.  

For its part, Saudi Arabia has sufficient funds to start large projects both locally and abroad, and in this way the Arab country would manage not to depend on oil and diversify its economy. 

According to information recently published by the Sovereign Wealth Fund Foundation (SWF), the Saudi fund ranked eighth in the global ranking, compared to ninth place in the previous update.     

The data also indicated that the Saudi fund's assets increased by about $20 billion, reaching $450 billion, compared to $430 billion in the previous update.