A fall in Lucid Motors’ stock price caused a US$8.4 billion hit on Saudi Arabia’s Public Investment Fund’s US public equity holdings – but the rest of its stock holdings grew US$4.6 billion with tech stocks leading the charge.
The fund’s total US public equity allocation at the end of June fell 8.7% q-o-q to US$39.9 billion. Lucid represented 44% of the portfolio, down from 59% at the end of March. If the 32.4% fall in PIF’s Lucid Motors holdings is excluded, the fund’s other holdings grew by a consolidated 25.6% q-o-q to US$22.5 billion – and representing a 41.0% rise compared to end-Q2 2021, before Lucid’s IPO.
Tech stocks that gained PIF’s attention in Q2 included Adobe Systems (US$420 million), Alphabet (US$464 million), Datadog (US$428 million), Meta Platforms (US$381 million), Microsoft (US$474 million), Salesforce (US$437 million) and Zoom (US$507 million). Altogether, PIF increased its allocation to tech stocks by US$2.8 billion. Financial sector stocks also got a US$1.2 billion boost from the Saudi fund, including Blackrock (US$452 million), JPMorgan & Chase (US$434 million) and PayPal (US$388 million).
PIF’s public equities strategy is still evolving, with greater strategic nous on display than in pandemic-hit 2020, when it behaved more like a retail investor, shifting between stocks to follow short-term market trends. One strategic interest is gaming stocks, which totalled US$7.3 billion at end-Q2, down 9.1% q-o-q due to dips in some prices rather than cashing them in. Representing 18.3% of the total US public equity portfolio, the allocation to gaming was more than double the level reported at end-June 2021.
PIF has stuck by Lucid, as it has faced a supply crunch that undermined its 2022 production target, which was reduced from 20,000 to just 6,000-7,000. It has retained a stake of 62.7% in the luxury electric-vehicle group, which still remains an investment success for PIF despite the hit on the share price over H1. Saudi Arabia has thrown the carmaker a lifeline, with a deal to supply up to 100,000 electric vehicles to the Kingdom over the next decade. In May, it awarded around US$3 billion in incentives to the EV manufacturer to establish a 155,000 car per annum production facility in Saudi Arabia, with capacity targeted to rise to 500,000 by the middle of the decade.
Earlier this month, Faisal Sultan, managing director of global operations at Lucid, told Bloomberg TV, “The PIF have been very supportive. When the world re-emerges from the pandemic and the supply chain catches up, we will be ready.”