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Business Insider: Saudi Arabia funneled oil riches into big-cap US stocks with a $7.5 billion buying spree amid falling valuations

Saudi Arabia
  • Saudi Arabia’s sovereign-wealth fund ramped up its bets on US big-cap stocks in the second quarter.
  • The Public Investment Fund poured more than $7 billion into stocks like Alphabet, Amazon and JPMorgan.
  • The PIF’s holdings of US stocks stood at $40.7 billion at the end of the quarter.

Saudi Arabia’s sovereign-wealth fund ramped up bets on US big-cap stocks with more than $7 billion in new investments during the second quarter.

The Public Investment Fund bought shares of 17 companies, including tech giants Alphabet, Amazon, and Microsoft; retail chains Home Depot, Costco and Starbucks; plus finance heavyweights JPMorgan and BlackRock.

The buying spree came as US stocks offered discounts, as the S&P 500 index lost 16% and the Nasdaq sank 22% during the second quarter. Meanwhile, high oil prices helped state-owned energy giant Saudi Aramco earn $88 billion in the first half of the year, providing the wealth fund with a capital windfall for investments.

The total market value of the PIF’s US stocks dipped by $3 billion to $40.8 billion in the second quarter as valuations of other holdings fell during the market sell-off. The fund overall has a total of $620 billion in assets under management.

The PIF, which is chaired by Saudi Crown Prince Mohammed bin Salman, is attempting to double its total assets by 2025, while also lowering the country’s dependence on oil.

The PIF is also expanding deeper into tech. The fund expanded on positions in Meta and Paypal while pouring close to $2 billion into Electronic Arts.

Read the original article on Business Insider

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History of the oil industry in Saudi Arabia (Read More on This Subject @ Wikipedia)

Saudi Arabian oil was first discovered by the Americans in commercial quantities at Dammam oil well No. 7 in 1938 in what is now modern-day Dhahran.

Prior to 1938, there were three main factors that triggered the search for oil in Arabia:

→The discovery of oil by the Anglo-Persian Oil Company at Masjid-i-Sulaiman in the mountains of north-western Persia in 1908; but the consensus of geological opinion at the time was that there was no oil on the Arabian peninsula, although there were rumors of an oil seepage at Qatif on the eastern seaboard of Al-Ahsa, the eastern province of Arabia.

→The demand for oil during World War I. It became obvious that oil was going to be a crucial resource in warfare for the foreseeable future.[2] Examples that proved this were “General Gallieni’s commandeering of the Paris taxi fleet to ferry soldiers to the front. This happened when the city seemed about to fall”.[4] In addition to this, Germany’s shortage of oil supplies hindered its ability to produce aircraft, automobiles, and engines. The allies took advantage of this by producing thousands of vehicles to aid their war effort.[4]

→The onset of the Great Depression. Prior to the depression, a major source of income for the ruler of Hijaz was the taxes paid by pilgrims on their way to the holy cities. After the depression hit, the number of pilgrimages per year fell from 100,000 to below 40,000.[2] This hurt their economy greatly and they needed to find alternate sources of income. This caused Ibn Saud to get serious about the search for oil.

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