The Saudi Public Investment Fund (PIF) is on the verge of making significant investments in Chinese companies, having previously limited most of its foreign holdings to the United States and Europe. The $450 billion sovereign wealth fund has applied for a Qualified Foreign Institutional Investor (QFII) license in China, according to information published on the website of the country's largest securities regulator. The license will allow the fund to trade stocks priced in renminbi directly, instead of having to go through third parties.
This move towards China makes sense for the Kingdom, which seeks to strengthen economic relations through investments from its sovereign fund. China is the largest trading partner of the Kingdom and the biggest customer of Saudi Aramco, which is headed by the governor of the Public Investment Fund, Yasir Al-Rumayyan. Many global investors are gearing up to deal with struggling Chinese stocks amid bets that the government's regulatory reform for companies has peaked. The world's second-largest economy has also been an attractive destination for sovereign investors, with the Russian wealth fund converting billions of dollars into yuan as part of an effort to make the country less susceptible to sanctions.
The Public Investment Fund, which has not disclosed any investments in China, aims to control assets worth $1 trillion and become a global investment powerhouse. However, since revealing plans to transform itself from a passive holding company focused on the local market five years ago, the fund's announced investments have mostly been in the United States and Europe. Its first major international deal was a $3.5 billion investment in Uber Technologies in 2016. Recently, it supported Lucid Motors prior to its public offering through a deal with a special purpose acquisition company.
In March of last year, as global markets collapsed amid the onset of the COVID-19 pandemic, the Public Investment Fund received $40 billion from the Kingdom's reserves to bet on a swift recovery of equities. It disclosed stakes worth $10.1 billion in publicly listed U.S. companies, including Walt Disney, BP, and Boeing, at the end of June last year, and then sold most of them after three months as markets surged.
