"Oil Boom" Saudi Sovereign Wealth Fund Invests 9.9 Trillion KRW in US Stocks Including Amazon and JP Morgan

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Saudi Arabia's Public Investment Fund (PIF) poured 9.9 trillion won into U.S. stocks from Amazon to JP Morgan during the second quarter (April to June). This is interpreted as the Saudi royal family turning the large profits gained from the surge in oil prices due to Russia's airstrikes on Ukraine into investments.

According to the Wall Street Journal (WSJ) and others on the 16th (local time), the Saudi PIF recently disclosed in a report submitted to the U.S. Securities and Exchange Commission (SEC) that it purchased stocks of 17 U.S. companies worth $7.5 billion (approximately 9.9 trillion won) as of the end of June. These include Alphabet, Google's parent company, BlackRock, Microsoft (MS), Amazon, and JP Morgan. Each investment was at the level of $400 million to $500 million.

Although the sovereign wealth fund bought a large amount of U.S. stocks, the valuation of its U.S. stock holdings fell by $3 billion during the second quarter to $40.8 billion. This decline in valuation was due to the continued downturn in the U.S. stock market during the second quarter. The S&P 500 index, which includes most of the stocks purchased by the sovereign wealth fund, fell by 20% in the first half of this year. The total investment size of the sovereign wealth fund reaches $600 billion.

The sovereign wealth fund is a state-owned fund established by the Saudi royal family. Saudi Arabia has positioned itself as a major player by purchasing U.S. stocks over several years centered around this fund. Recently, the rapid increase in oil prices has made it easier to invest as the fund's holdings have grown quickly. Saudi Aramco, the Saudi state-owned oil company in which the sovereign wealth fund holds a 4% stake, recently announced a 90% increase in quarterly net profit. In recent months, the sovereign wealth fund also invested $3 billion in Japan's Nintendo and $400 million in the UK's Aston Martin.

The surge in oil prices has not only benefited the Saudi royal family's economic interests but also brought about changes in international politics. In particular, it provided an opportunity to break the diplomatic isolation of Crown Prince Mohammed bin Salman, who was implicated in the killing of Saudi dissident journalist Jamal Khashoggi. U.S. President Joe Biden, who during the 2020 election period mentioned isolating Saudi Arabia internationally over the Khashoggi killing, ultimately met with Crown Prince bin Salman for these reasons.