May 18, 2020
Saudis Have Found a Risky Way to Make Money on the Crisis
By Marko Vidrih on The Capital
The Saudi Arabia Sovereign Wealth Fund (Public Investment Fund, PIF) has begun buying up shares of leading US companies and banks in order to capitalize on the collapse of their value due to the current crisis, Bloomberg reports citing data from the US Securities and Exchange Commission.
The fund invested $713.7 million in Boeing, $522 million in Citigroup and Facebook, and a little less than $500 million in Disney and Bank of America. Another 827.7 million PIF spent on shares of the oil company BP, and 300 million on a number of other companies.
At the same time, the organization was about to take risks as part of this way to earn income in the future. PIF is negotiating a $10 billion loan to buy even more shares, sources close to the decision say. The fund itself denies this possibility, claiming that it has enough of its own funds.
Fund manager Yasir al-Rumayyan confirmed the very policy of buying cheaper shares back in April, citing the airline as successful investment examples.
Even before the April transaction OPEC +, in which 23 countries went for a record reduction in oil production, PIF bought up shares in four European oil companies. Then it was spent about a billion dollars. Apparently, the organization hoped for a sharp increase in oil prices, however, the agreement did not inspire the market, oil prices continued to fall.
Search for any means of earning Saudi Arabia makes the situation with the income. The budget deficit in the first quarter reached nine billion dollars, so the kingdom authorities will stop paying the cost of living from June 1, and increase the value-added tax three times, from July 1, to 15 percent.
Author: Marko Vidrih
Featured image credit: Pixabay
