WallStreetexecutivesareheadedtoSaudiArabia’sannualFutureInvestmentInitiative(FII)inRiyadh,luredbypromisesofinvestmentandSaudiArabia’s$1trillionPublicInvestmentFund(PIF).
BignameslikeDavidSolomonfromGoldmanSachs,LarryFinkofBlackRock,andCitigroup’sJaneFraserareexpectedtobeattheevent,whichfillsRiyadh’sluxurioushotelsandshowcasesSaudi’sVision2030.
Thisinitiativeplanstotransformthekingdom’seconomy,reducingitsrelianceonoilandbolsteringothersectors.TheFII,launchedin2017,putsSaudi’sinfluenceondisplay,despiterisingregionaltensions.
Butthere’sadifferentatmospherethisyear.FinancialtighteninginSaudiandescalatingconflictsintheMiddleEast(withthreatstooilinfrastructure)aregivinginvestorspause.
Asthekingdomfocusesmoreondomesticinvestment,executivesaccustomedtoSaudichecksarenowexpectedtoshowcommitmenttoitsfuture.
“Saudihasclearlytoldthem,weknowyouwantourmoney,buthowareyouparticipatinginourfuture?”economistMariusVygantassaid.Manyaren’tpreparedtoanswer.
HowtheGaza,Lebanonwarsaffectthesummit
Lastyear’sconferencefollowedtheOctober7HamasattackonIsrael,whichledtoIsrael’sdeadlyretaliationagainstGazaandcomplicatedtheSaudi-U.S.-Israelties.
ManyWesternexecutiveshadavoidedtheFIIafterthe2018killingofjournalistJamalKhashoggi,attributedbyU.S.intelligencetoCrownPrinceMohammedbinSalman(MbS).
Sincethen,MbShassoughttomenditsinternationalreputation,withSaudicallingforceasefiresinGazaandLebanonamidrisingviolence,fearingthefalloutonitsownstability.
Someexecutivesatlastyear’sFIIopenlybackedIsrael,whileJPMorganChase’sJamieDimonadvisedSaudinottoabandonaU.S.-ledpeaceinitiativewithIsrael.Saudiwantsregionalstability,whichitbelieveswillhelpattractforeigncapitalandexpertise.
MbSevenjoinedtheEU’srecentsummitwithGulfstates,signalinghisinterestinbroadeningSaudi’salliancesashesteersVision2030forward.Thisyear,FIIwillfeaturea“NewAfricaSummit,”withindustryleadersfromminingandbanking.
GulfstatesareeyeingcriticalmineralsinAfricaastheytrytodiversifyfromoil.Saudi’sPIFisheavilyinvolved,withprojectsrangingfromtheNEOMcityprojecttoluxurytourismsiteslikeRedSeaGlobal.
Butwiththekingdomreviewingitsfinances,someprojectsmayfacedelaysorcutbacks,whilethegovernmentprioritizesthosecriticaltoVision2030.ThePIFislookingtoforeignfirmsforcommitmentsratherthansimplysigningchecks.
ForeigninvestmentdrivesSaudi’sVision2030
Saudihassetanambitioustargetof$100billioninforeigndirectinvestment(FDI)by2030—nearly6%ofitsGDP.FDIisgrowing,butmid-waytotheVision2030mark,currentlevelssuggestSaudimightstruggletoreachitsgoal.
ThePIF,centraltoVision2030,haspartneredgloballyforprojects,fromthefuturisticcityNEOMtotheentertainmentcityQiddiya,butwithoilpricesdown,revenuehasdipped.Inresponse,thegovernmenthasstartedreviewingprojectspending,scalingbackonsomeinitiativestostretchitsresourcesfurther.
Pressureismountingoninternationalfirms,accustomedtoSaudibackingfortheirglobaldeals,tocommitfundstodomesticprojects.BlackRock,forexample,agreedtoestablishamulti-assetinvestmentplatforminRiyadh,securedwith$5billionfromthePIF.
Lastyear’sFIIsawdealsworth$17.9billion,whileorganizersproject$28billioninnewagreementsforthisyear’sevent.AmongthepotentialdealsisamajorAI-focusedfund,whichcouldgrowto$40billionincollaborationwithAndreessenHorowitz.
Anotherlikelyannouncementisa$10billioninvestmentinhydrogenproduction,partofSaudi’stransitiontolow-carbonenergy.
Thecountryisalsoexpandingitsinternationalfinancialconnections.Twoexchange-tradedfundswilldebutonRiyadh’sstockexchange,allowinglocalinvestorstobuyintoHongKongstocksasthekingdomlookstostrengthenitstieswithChina.
High-profileguestsfromAsia,includingHongKong’sFinancialSecretaryPaulChan,arescheduledtospeak,furtherreflectingSaudi’sgrowingfocusonAsiaamidtensionswiththeWest.
Meanwhile,CopleyFundResearchreportsthatemergingmarketfundswithSaudiexposurehit56%butrecentlystalledasconflictsbetweenIsraelandIranintensified.SomefundsevenreducedSaudiholdingsbetweenMarchandSeptember,rankingthekingdomasamajorunderweightmarketafterTaiwanandIndia.
LimitsofSaudi’sfinancialpowertestMbS’sambitions
Saudi,despiteitsoilwealth,faceseconomicconstraintsthatareforcingMbStorethinkspending.Thegovernmentpredictsbudgetdeficitsuntilatleast2027andhasdelayedcertainVision2030projects.
Still,about7,000peoplehaveregisteredforthisyear’sevent—ahighernumberthanlastyear,whichwasheldsoonafterthelatestregionalconflictbegan.RichardAttias,CEOoftheFIIInstitute,remainsoptimistic.“Investorsarecomingdespitewhat’shappening,”hesaid.“Theshowmustgoon.”
cryptopolitan.com