Saudi Arabia will host the biggest names in finance and technology next week in a test of investor appetite for the kingdom’s ambitions to transform itself into a global hub. demand at a time of growing regional conflict.
International operators will face a region shaken by geopolitical tensions, with the threat of further military confrontation between Israel and Iran at its highest level in decades. And they will land in a country that is increasingly facing the reality that even its vast oil resources have limits.
But those who came to the Future Investment Initiative – often dubbed Davos in the desert – seemed undeterred, sensing an opportunity to participate in the vision 2030 plan to rebuild the economy. Crown Prince Mohammed bin Salman’s trillion-dollar price tag. David Solomon of Goldman Sachs Group Inc., Jane Fraser of Citigroup Inc. and Larry Fink of BlackRock Inc. have become regular attendees of the Riyadh summit and will return this year.
Reflecting Saudi Arabia’s focus on technology and artificial intelligence, they will be joined by prominent names in those industries. Chairman of Alphabet Inc. Ruth Porat and TikTok Inc CEO. Shou Chew will speak at the summit for the first time. Benjamin Horowitz, tech entrepreneur and co-founder of venture capital giant Andreessen Horowitz, will also appear.
Read more: Saudi Arabia, UAE bet on chips to power post-oil future
Wall Street and Silicon Valley are increasingly turning to the oil-rich Middle East as liquidity tightens in other parts of the world, especially China. Saudi Arabia itself holds nearly $1 trillion in national assets, although the Crown Prince wants industry giants to stop deploying that money abroad and instead help support domestic ambitions your.
However, the landscape is one of growing uncertainty.
Saudi foreign policy has recently focused on reducing regional tensions in the hope that a more stable region will attract foreign capital and technological know-how. However, the events of the past year are a reminder of how unstable the region is.
“The impact of regional instability on the outlook for foreign investment is overwhelmingly negative, with the possible exception of international industry,” said Gregory Gause, Professor of International Relations at Texas A&M University. room”. Capital “is not attracted to conflict zones, even if the country is not directly involved in the conflict.”
To be sure, Saudi Arabia is still pushing ahead with its major development plans. According to Richard Attias, CEO of the FII Institute, deals worth more than $28 billion are likely to be announced by executives around the world in the coming week.
Some of these will focus on AI, including the possibility of establishing a new fund with Andreessen Horowitz that could develop up to 40 billion USD. The kingdom is also expected to announce a new company it will invest in at least 10 billion USD in making Saudi Arabia a leading global producer of hydrogen – a low-carbon fuel that could be key to helping the world transition away from burning fossil fuels.
Two exchange-traded funds will launch trading in Riyadh, giving Saudi investors exposure to Hong Kong stocks – reflecting the kingdom’s growing ties with China as it looks to boost flows invest with its largest trading partner. Hong Kong Finance Minister Paul Chan and Belt and Road Commissioner Nicholas Ho will speak at FII as some of the most prominent speakers from Asia.
However, regional conflicts are certainly weighing on global investor sentiment in the Middle East. Saudi Arabia, the Gulf’s largest economy, is feeling it.
The number of actively managed emerging market funds with Saudi ties had grown sharply so far this year, but stagnated at around 56% as tensions between Israel and Iran escalated, according to Copley Fund Research. The number of funds investing in the Saudi stock market fell slightly between March and September this year, and the country is the third largest underweight after Taiwan and India, data shows.
With that, Crown Prince Mohammed was right accept limitations even Saudi Arabia’s huge financial resources to pay for its ambitions. The government forecasts a deficit until at least 2027, saying some projects will need to be delayed.
Read more: Saudi Crown Prince’s Billion-Dollar Change Faces Funding Cuts
At the same time, the Public Investment Fund, the kingdom’s powerful sovereign fund chaired by the de facto ruler, is becoming a harder place for foreign companies to make money. The increased focus on domestic projects such as the $1.5 trillion Neom has global asset managers concerned that the PIF will have less money to spend abroad.
Zaid Belbagi, managing partner at political risk consultancy Hardcastle Advisory, said: “FIIs were always designed as a mechanism to invest in Saudi Arabia, but in reality, this is an opportunity for investors. foreign executives withdraw financial resources from the Kingdom.” “Hotels selling out at $500-$1000/night is a sign of sustained international interest.”
Riyadh conference organizers remain confident and some 7,000 people have registered to attend this year’s event. That number is higher than the numbers for last year’s summitcomes days after the current conflict in the region began.
Investors are coming “regardless of what is happening in the world,” FII Institute’s Attias said. “The show must go on.”
