Why did Saudi Arabia buy $7.7 billion shares in the world’s best-known companies during the COVID-19 crisis
The Sovereign wealth fund of Saudi Arabia invests over 7 billion USD in companies like BP, Boeing, Facebook, Citigroup, Bank of America (BOA), Walt Disney, Starbucks, and Pfizer. There was a mentionable investment in the cruise ship ‘Carnival’ and the concert promotion company ‘Live-nation’.
This large scale investment was spearheaded by Prince Mohammed, who took over the presidency of the Public Investments Fund (PIF) in early 2015. In an official interview, he said ‘we were looking to diversify our portfolio. The COVID crisis presented us with an opportunity, and we had to act fast’.
Why did Saudi Arabia invest during the pandemic?
PIF invested close to 828 million USD in the England-based energy company BP. The timing couldn’t have been better as the energy company’s share price at the time of purchase was at a 24-month-period low.
These investments were made when the global demand for crude oil and other forms of non-renewable energy was at an all-time low.
Saudi Arabia is confident that the market conditions will improve significantly when the crisis is resolved, and when business as usual returns, the market value of their investments will rise and return a sizable return on investment.
Likewise, PIF of Saudi Arabia invested in 3 other energy-based organizations that were undervalued at the time due to the depression caused by the COVID-19 pandemic.
Saudi Arabia’s investment in Facebook explained:
On May 15, 2020, Facebook announced its investment of 1 Billion USD to build an under-water sub-sea wired connection to the African continent to provide a faster internet connection to 23 countries in Africa.
This project ‘2Africa’ aims to provide faster and reliable internet connectivity to 1.3 billion people in the continent. Currently, only 1/3rd of the population there can access the internet, and this opens avenues for new user acquisitions and long term engagement.
Upon completion, project 2Africa aims to facilitate fast and reliable 4G and 5G connections across Egypt, Middle-east and other parts of Africa.
This investment in the Facebook Group could open avenues for the oil-trade-centric country to expand its global outreach and capitalize on it.
The COVID crisis
The stock market witnessed a significant downfall since the beginning of March and caused massive chaos in organizations around the world. Large-scale multinational organizations, along with small and medium-scale enterprises like Airbnb, Uber, United Airlines, Marriot, Walt Disney and Hilton among others have experienced a sudden flux with the inflow of cash.
Companies catering to the essential and non-essential needs had to limit operational costs to ensure its continuity and survival.
Companies like Boeing, BP, Bank Of America, Pfizer, and Walt Disney were facing an acute cash crunch sold their shares to ride the wave with an aim to increase their share value after the global lockdown.
An opportunity in disguise
Exchanges like the New York Stock Exchange (NYSE), NASDAQ, EURONEXT, Tokyo Stock Exchange(TSE), and the Shenzen Stock exchange (SSE), Bombay Stock Exchange (BSE) have witnessed a considerable downfall in their stock’s valuation.
This downfall has presented itself as an avenue for forex brokers in South Africa and nations around the world to invest globally.
NYSE experienced a significant depreciation in its market cap in March 2020 from 12800 points to 8,777 points. Similarly, EURONEXT recorded depreciations as steep as 46.67%, and gains as high as 11% as of May 18, 2020.
Online stock brokers around the world are riding this wave backed with technical and fundamental analysis to predict the market and capitalize on its activities.
If you are in the market looking to capitalize on cryptocurrencies, there are bitcoin trading platforms & exchanges that are currently operational and are facilitating trade across all major cryptocurrencies like Bitcoin, Etherium, Ripple, and Bitcoin Cash among others. These platforms are now introducing inbuilt technical analysis tools in these adverse bearish market conditions to help their users make intelligent trades.
Similarly, you can trade with global stock exchanges like NYSE, EURONEXT, NASDAQ, BSE, NSE, TSE, and SSE.