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Saudi wealth fund increases holdings in Chinese stocks, gains from Alibaba windfall

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According to reports, PIF has boosted its position in Alibaba for the second time in less than a year

Saudi Arabia’s sovereign wealth fund, Public Investment Fund (PIF), has upped its holdings in Chinese equities, with e-commerce giant Alibaba seeing the most movement.

PIF bought 153,500 shares in Alibaba in the first quarter of 2024, increasing its stake in the Chinese company by 11%, the South China Morning Post (SCMP) reported based on the Form 13F filing with the United States Securities and Exchange Commission.

PIF’s holdings in two other Chinese American depositary receipts, Pinduoduo and BeiGene, were unchanged from the previous quarter, the news report stated further.

According to the reports, PIF has boosted its position in Alibaba for the second time in less than a year. At the end of the quarter, the sovereign wealth fund held 1.61 million shares in the e-commerce giant, nearly tripling its stake since it initiated a position during the September quarter of 2021, the filings showed.

PIF held a total of 38 stocks worth USD 20.5 billion at the end of the 2024 first quarter. The same 13F filing revealed that PIF had also cut down on its United States stocks in the first quarter of the year, slashing the value of the direct holdings in those equities by nearly half. PIF, which held United States-traded stocks with a value of USD 35 billion by year-end 2023, saw its holdings down to USD 18 billion as of March 31, according to a Bloomberg report.

The Bloomberg analysis of the 13F revealed the Kingdom has cut down on its various tech stocks, which included stakes of USD 600 million or more in each of Amazon, Microsoft, and Salesforce. The direct holdings were replaced with call options on a lesser number of shares.

The news agency further stated about PIF dropping a USD 602 million stake in BlackRock, a USD 942 million investment in Carnival Corporation and a USD 757 million position in Booking Holdings.

As per the analysts, PIF increasing its holdings in Chinese stocks can be seen as a move marked with perfection, as the stock market in the world’s second largest economy has reportedly gained momentum. The MSCI China Index has surged nearly 28% since January 2024, restoring over USD 2 trillion of value to Chinese companies listed on the mainland, in Hong Kong and New York. Alibaba has rallied 24% during the period.

“Investors have relinquished the wait-and-watch approach [for Chinese equities] in favour of building exposure on incremental signs of easing and wiped out the underweight allocation from prior months,” Bank of America strategists including Ritesh Samadhiya said in a market note, citing a survey of 134 regional fund managers who oversee USD 301 billion of assets.

Beijing’s policy support in recent weeks has provided another “shot in the arm,” boosting risk appetite in China’s markets, analysts noted further.

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