Macro
Saudi Wealth Fund cuts US stock holdings by nearly half to $18 billion, shifts strategy to call options.
The Public Investment Fund (PIF) of Saudi Arabia significantly reduced its exposure to US stocks in the first quarter, cutting its direct holdings by nearly half. The Riyadh-based sovereign wealth fund's US-traded stock portfolio was valued at approximately $18 billion as of March 31, a sharp decline from $35 billion at the end of the previous year. This move reflects a strategic shift in the fund's investment approach towards the US equity market.
In a notable change in strategy, the PIF has moved away from direct holdings in several major tech companies, opting instead for call options on a smaller number of shares. This adjustment allows the fund to maintain exposure to influential tech firms such as Amazon.com Inc., Microsoft Corp., and Salesforce Inc., while reducing the capital at risk. The transition to call options signifies a more cautious approach to investment in the tech sector, amidst market volatility and valuation concerns.
The latest filing reveals that the Saudi wealth fund has completely exited its positions in certain US financial and travel companies. Notable divestments include a $602 million stake in BlackRock Inc., a $942 million investment in Carnival Corp., and a $757 million position in Booking Holdings Inc. These exits underscore a broader reallocation of the fund's portfolio, moving away from industries that may be perceived as having heightened risks or lower growth prospects in the current economic climate.