Elections weigh on US-Gulf economic relations
Investments worth billions of dollars in the US market and currencies pegged to the greenback leave Gulf states heavily exposed to the American economy.
Oil exports to the United States made the fortunes of Arab Gulf states for decades, but times are changing, and nowadays most tankers sail eastward to supply Asian markets. Saudi oil exports to the United States more than halved between 2014 and 2019. Yet the Gulf region continues to benefit significantly from the strength of the American economy.
The Gulf’s sovereign wealth funds have historically been heavy investors in the US market “in all facets,” said Michael Maduell, president of the Sovereign Wealth Fund Institute, listing large investments in bonds, public equities, fixed income, real estate, infrastructure and private equity funds. “They are very active,” he told Al-Monitor.
During the February-April coronavirus-induced stock market crash, Saudi Arabia’s Public Investment Fund (PIF) went on an opportunistic shopping spree, acquiring minority stakes worth over $5 billion in American blue-chip companies such as Boeing, Disney and Facebook. Just a few months later, the sovereign wealth fund closed some of those positions, making “huge profits,” fund governor Yasir al-Rumayyan told Barron's magazine.
“I would say we are heavily exposed to US financial markets, especially after our investment in SoftBank's Vision Fund and PIF being involved there,” Mohammed al-Suwayed, a Saudi asset manager and financial commentator, told Al-Monitor. According to the US Treasury Department, Saudi Arabia also holds $130 billion of US Treasury bonds.
