SAUDI DIPS INTO ITS RESERVES TO ENGAGE IN STOCK-BUYING BINGE

Saudi Arabia dipped into its reserves, transferring US$40 billion in two months to the Public Investment Fund (PIF) to support its stock-buying binge, Alison Tahmizian Meuse reported for Asia Times on June 4, 2020.

The move was confirmed by Finance Minister Mohammed al-Jadaan who said that the “this procedure was taken after comprehensive study and taking into consideration the sufficient level for foreign-currency reserves.”

Gross official reserves now stand at just over $450 billion, a comfortable cushion, but also a level not seen in Saudi Arabia since the 2008 financial crisis. At their highest point in 2017, the kingdom’s reserves reached $744 billion.

The PIF, which is controlled by Crown Prince Mohammad bin Salman, has used the injection to take significant stakes in a host of big-name, mostly US companies in industries suffering amid the COVID-19 financial recession. In April, those purchases included an 8.2% stock in struggling cruise line operator Carnival, and a 5.7% share in events promoter Live Nation. PIF executives see the move as a smart way to capitalize on the downturn and a spokesman for the fund told the Riyadh-based Arab News the massive transfer will “allow us to tap into a number of local and global investment opportunities at attractive prices.”