Macro

Saudi Wealth Fund Cuts US Equities to $18B, Exits Tech Giants

Saudi Wealth Fund cuts US stock holdings by nearly half to $18 billion, shifts strategy to call options.

By Barry Stearns

5/15, 17:15 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Amazon.com, Inc.
Booking Holdings Inc. Common Stock
BlackRock, Inc.
Carnival Corporation
Salesforce, Inc.
Microsoft Corporation
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Key Takeaway

  • Saudi Wealth Fund cut its US equities holdings from $35 billion to $18 billion, halving its direct stock investments.
  • Exited major tech and financial stakes, including Amazon, Microsoft, Salesforce, and BlackRock; shifted to call options for less capital risk.
  • Dropped investments in US travel firms Carnival Corp. and Booking Holdings Inc., reflecting a significant portfolio adjustment.

Saudi Wealth Fund Reduces US Stock Holdings

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.

Shift from Direct Holdings to Call Options

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.

Exiting Stakes in Financial and Travel Sectors

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.