While geopolitical risks continue to rise, the Saudi Sovereign Wealth Fund (PIF) is still aggressively buying assets worldwide, making it the most active sovereign investment fund in 2023.
Meanwhile, most global peers, including Singapore Government Investment Corporation (GIC) and Temasek Investment Corporation, are cutting spending.
According to a report released by the Global SWF data platform on Monday, Saudi Arabia's PIF invested $31.6 billion in 2023, far higher than the $20.7 billion in the previous year. This growth contrasts with a broader trend, with global sovereign investment funds investing a total of $124.7 billion in 2023, a decrease of about one-fifth year-on-year.
GIC led the decline as the investment company reduced its capital allocation by 46% to $19.9 billion, losing its position as the world's most active sovereign wealth fund for the first time in six years. Against the backdrop of market turbulence, Temasek Investment Company also reduced its new investments by 53% to $6.3 billion.
Global SWF stated that the decline in GIC's investments is largely related to developed markets. Singapore government investors continue to be active in emerging markets such as India, including the $1.4 billion joint venture between GIC and Brookfield India REIT, as well as Temasek's increased stake in Manipal Health Enterprises.
From the data, it can be seen that Singaporean government investors are becoming more cautious, and the position of sovereign wealth funds in the Gulf region in global trading activities is increasing. Currently, Gulf sovereign wealth funds account for nearly 40% of the total investment of sovereign investors.
Diego L ó pez, Managing Director of Global SWF, believes that these sovereign investment funds are not lacking funds, but they have chosen to act cautiously in the context of intensified market turbulence.
Influence
Overall, sovereign wealth funds controlled by the governments of Abu Dhabi, Saudi Arabia, and Qatar, which are rich in oil and gas resources, held 5 seats out of the top 10 most active sovereign funds last year.
And this trend may continue. According to a report released by the International Finance Association (IIF) in December last year, by the end of 2024, the governments of the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman, and Bahrain will control approximately $4.4 trillion in foreign assets, of which two-thirds may be managed by sovereign wealth funds.
The region has numerous sovereign wealth funds, which have become increasingly important sources of cash in international transactions after the surge in energy prices in 2022 led to a surplus in most Gulf government budgets.
It is reported that last year PIF acquired American gaming company Scopley for nearly $5 billion through its subsidiary Savvy Games Group, and also invested $265 million in Tencent supported esports event organization company VSPO, becoming the single largest shareholder of VSPO,
Saudi Crown Prince Salman previously launched a national esports gaming strategy aimed at turning Saudi Arabia into a global gaming industry center. In addition, PIF has also supported some significant domestic transactions to help support Saudi Arabia's economic diversification.
Global SWF pointed out in its report that various transactions demonstrate the unparalleled financial strength and influence of PIF and its subsidiaries.