Dollar peg link lures Asian investors to Saudi Arabia: PIF

Zawya

25-02-2025

Saudi Arabia's decision to maintain a long-standing peg between its currency, the riyal, and the US dollar is tempting Asians and other investors to projects in the Gulf Kingdom, says a senior executive at the Saudi Public Investment Fund (PIF).
Abdulmajeed Al-Hagbani, head of securities investment at the PIF, said the Fund is concentrating on attracting global investors and opening up the local market through increasing transparency and providing clear indicators for business opportunities in the world's dominant oil exporter and largest Arab economy.
Al-Hagbani, quoted by the Saudi Arabic language daily Aliqtisadia at the weekend, said this strategy is paying off as it has led to an increase in foreign capital inflow.
'The Saudi market has a unique advantage, especially for Asian investors, as assets are priced in riyal, which is linked to the US dollar… this link provides them with relative stability compared to other markets,' he said.
Saudi Arabia's domestic economy thrives on robust growth and a dynamic young population, he said.
'Our mission was to explain these advantages to foreign investors and this has contributed to achieving success and increasing demand for our investment products.'
Saudi Arabia and other Gulf oil producers have resisted pressure to delink their currencies from the dollar despite sharp fluctuations in the greenback, the official currency of their oil sales. Only Kuwait does not have that link as its dinar is pegged to a basket of currencies, in which the dollar is the largest component.
Al-Hagbani said the PIF's strategy focuses on long-term investments guided by well-defined criteria to ensure sustainable returns.
He pointed out that the average annual return on managed assets in global markets is about 8 percent.
'There is no investor in the world who does not look at returns, and we at the fund do not target annual or quarterly profits. Our investments are long-term, and we are satisfied with the returns we achieve from our investments,' he said.
The PIF, one of the world's largest sovereign wealth funds (SWFs), launched in late 2023 two initiatives to support the development of Saudi Arabia's asset management industry. They included the PIF Managers Gate Platform and the Portfolio Management Development Programme.
The PIF Managers Gate saw the launch of a new digital platform for collaboration between PIF and external fund managers.
The portal enables secure data sharing, improved communications, and the digitisation of operational and investment due diligence processes.
Al-Hagbani said PIF launched the Asset Managers Portal to facilitate asset managers' communication with the fund and present their products and strategies.
He said the system ensures the unification of procedures regardless of the different formats and numbers used by asset managers.
'This initiative is expected to improve the efficiency of evaluation and selection, to attract the best asset managers globally,' he said.
He added that PIF has so far received more than 90 serious requests, mostly from international investors and is currently working with 37 asset managers, including 13 global managers operating in the Saudi market.
'Three of them have recently moved their regional headquarters to the Kingdom thanks to our supportive initiatives.'
(Writing by Nadim Kawach; Editing by Anoop Menon)
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