Saudi Wealth Fund (PIF) Moves Step Closer to Direct China Stock Deals

Saudi Arabia’s Public Investment Fund (PIF) may be poised to start making major investments in Chinese companies, after so far mostly limiting its overseas holdings to the US and Europe, Bloomberg reported.

The $450 billion Public Investment Fund has applied for a Qualified Foreign Institutional Investor license in China, according to information published on the website of the country’s top securities regulator. That will give it the ability to directly trade renminbi-denominated stocks, rather than having to go through third parties.

A tilt toward China would make sense for the kingdom as it looks to develop economic ties through investment by its sovereign fund. China is the kingdom’s biggest trading partner and a top customer for Saudi Aramco, which is chaired by PIF Governor Yasir Al Rumayyan.

But since unveiling a plan to transform itself from a domestically focused holding company five years ago, its publicly disclosed investments have mostly been in the U.S. and Europe.

Its first major international deal was a $3.5 billion investment in Uber Technologies Inc. in 2016. More recently it backed Lucid Motors Inc. before it went public through a deal with a special purpose acquisition company.

Last March, as global markets crashed amid the onset of the coronavirus pandemic, the PIF got a $40 billion transfer from the kingdom’s reserves to bet that stocks would recover quickly.

It disclosed $10.1 billion worth of stakes in U.S.-listed firms including Walt Disney Co., BP Plc., and Boeing Co., at the end of June last year, and then sold off most of them three months later as markets soared.