Saudi Arabia’s sovereign wealth fund signs $50 billion deals with 6 top Chinese institutions

Saudi Arabia’s sovereign public investment fund (PIF) and six leading Chinese financial institutions have signed investment agreements worth a total of US$50 billion, significantly strengthening financial and business ties between the two countries.

This amount is 1.5 times the total foreign direct investment inflow into China in 2023.

The agreements were concluded with the Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB), China Export and Credit Insurance Corporation (SINOSURE), Export-Import Bank of China (CEXIM) and Industrial and Commercial Bank of China (ICBC), PIF said in a statement on Thursday.

The agreement did not disclose many details. The partnerships are designed to promote two-way capital flows between countries through both debt and equity, and are part of PIF’s strategy to “support institutional partnerships around the world,” it said in a statement. It was not immediately clear where the money would be used.

The news comes shortly after two ETFs tracking Saudi Arabia’s largest companies released their a winning debut in ChinaThe ETFs, which invest through a Hong Kong-based master fund, were quickly seized by Chinese investors on their first day of trading and gained nearly 8 percent on the Shanghai and Shenzhen stock exchanges.

In another move to strengthen ties between Saudi Arabia and mainland Chinese financial markets, an ETF tracking the Hang Seng Index, a benchmark for Hong Kong, is currently in the works, aiming to give Middle Eastern investors exposure to blue-chip stocks from Hong Kong and mainland China.

As reported by local media earlier this month, PIF also plans to open a new office in Beijing in the fourth quarter of this year or the first quarter of next year.

With $925 billion in assets under management as of March 2024, PIF is the world’s fifth-largest sovereign wealth fund. Its engagement with China extends beyond financial markets to the energy sector.

On July 16, the Saudi state investor announced plans establish joint ventures with Chinese photovoltaic module giants Jinko Solar and TCL Zhonghuan Renewable Energy Technology – the world’s two largest producers of photovoltaic modules and silicon wafers for solar cells – as well as with Chinese wind turbine manufacturer Envision Energy.

The new agreements are part of PIF’s efforts to position advanced renewable energy technologies in Saudi Arabia, said Yazeed Al-Humied, deputy governor and head of investments for the Middle East and North Africa at PIF. He added that the partnerships will help the kingdom become a “global hub for renewable technology exports.”

PIF, ABC, BOC, CCB, ICBC, CEXIM and SINOSURE have not yet responded to requests for further details on the agreements.