Gulf

1. PIF’s domestic focus
2. FII deals, so far
3. AI’s unlimited promise
4. Still an oil story
5. Titans predict Trump win
6. NEOM from space

An energy expert weighs in on the big concern at FII: OPEC+ dilemma

Hi, and welcome back to Semafor Gulf. I’m Liz Hoffman, Semafor’s business and finance editor, stepping in for Mohammed.

He and I spent the past few days together at the Future Investment Initiative (FII) in Riyadh, the conference that Saudi Arabia hopes to turn into a Davos-slayer. My readers at Semafor Business will get his thoughts tomorrow; today you get my musings.

There’s a sense among Western executives and investors that the world needs a new commercial crossroads. Hong Kong is less international every day. Post-Brexit London has stagnant growth, limping capital markets, and a newfound prudishness about the shadowy wealth of oligarchs and royals. Paris and Frankfurt have turned out to be unserious replacements.

The race is on in the Gulf. Abu Dhabi, the self-styled “capital of capital,” is now the world’s richest city. This week it hosted its largest IPO of the year, a regional grocer whose shares sold out in an hour. Riyadh has its King Abdullah financial district, which added Goldman Sachs this week to its list of corporate residents. The Tadawul has grown from the world’s 25th-biggest stock exchange to its 10th since 2019, and its subway system — delayed, but expected to open soon — makes this New Yorker seethe with jealousy.

Having spent the past 20 years betting on China and the other BRICS countries with nothing to show for it, Western companies need new growth markets.

The Gulf has a lot going for it: abundant energy, low taxes, trillions of dollars to invest, US-allied and competent if undemocratic governments, a foothold in sports. It’s the right time zone for global conference calls (this matters more than you think).

“Countries that can mobilize capital and bridge gaps between east and west, north and south, are essential,” Yasir Al-Rumayyan, the governor of Saudi Arabia’s $930 billion sovereign-wealth fund, said here yesterday. “Saudi Arabia stands as a superconnector, with its unique resources and strategic geographic location.”

Its only real competition right now are Abu Dhabi and Singapore, which also feature low taxes and access to fast-growing markets in the Global South. In a post-pandemic world of distributed corporate resources, there’s room for all three.

— For the biggest stories and scoops from Wall Street, subscribe to Liz’s twice-weekly newsletter. Sign up here.

PIF refocuses on domestic goals

The Public Investment Fund (PIF) plans to trim its portion of international holdings to as little as 18% of its portfolio, down from 21% now and 30% in 2020, as the sovereign wealth fund focuses on building out new industries and cities in Saudi Arabia. The absolute dollar amount of foreign investments will actually increase, however, as total assets rise, PIF Governor Yasir Al-Rumayyan said on the opening day of FII.

Since his 2015 appointment, PIF has grown from a $150 billion fund — with just 2% of assets abroad — to a global giant. It’s now accelerating investments in the 92 Saudi companies it established to drive the kingdom’s economic transformation, from real estate projects like NEOM and Red Sea Global, to smart manufacturing firm Alat and video-game and esports developer Savvy Games. Saudi Arabia is prioritizing investments in megaprojects like NEOM and a massive infrastructure upgrade in Riyadh as it prepares to host Expo 2030 and the 2034 men’s soccer World Cup.

Deals trickle in at FII

FII attendees are bracing for an expected $28 billion in deals. So far, only a few have been announced. Saudi Aramco and Vietnam Oil agreed to discuss storage, supply, and trading of energy and petrochemical products, while renewable energy firm ACWA Power closed four deals worth $1.78 billion for projects and financing in Saudi Arabia, Kuwait, Uzbekistan, and Morocco. Smaller co-investments were announced with Azerbaijan’s sovereign wealth fund, as well as with funds in Hong Kong and Indonesia.

Saudi Arabia is touting its success in attracting foreign investment in the country. The number of licensed international companies is now 10 times what it was eight years ago, Saudi Minister of Investment Khalid al-Falih said. The kingdom requires companies to set up regional headquarters in Saudi Arabia to win government contracts.

AI optimism outweighs concerns

Artificial intelligence is dominating discussions at FII, the subject of dedicated panels and most conversations, with views ranging from bullish to utopian. PIF Governor Yasir Al-Rumayyan said the kingdom aims to be a global AI hub by building out data centers and semiconductor infrastructure, while BlackRock’s Larry Fink highlighted technology’s productivity potential, noting that it helped his firm add $5 trillion in assets without boosting its workforce.

Elon Musk and SoftBank’s CEO Masayoshi Son went further. While Musk said there’s a 10-20% chance that AI could hurt humanity, he said the upside was that AI and humanoid robots can bring in an age of abundance. Son predicted that Artificial Super Intelligence — 10,000-times smarter than humans — will be achieved by 2035, freeing people from labor. “We are born crying and die crying,” Son said. “In between, we should be happy. We should let the robots do the work.”

Finance chiefs forecast Trump win

A consensus is emerging among the titans of global finance attending FII: Donald Trump has the edge. “We are at that moment of peak uncertainty. It is a race that Trump is favored to win but it is almost a coin toss,” Ken Griffin, the founder of the hedge fund Citadel, said. Blackstone’s Steve Schwarzman shied from making a prediction but tipped Trump, saying that compared to 2016 he “is in a much better base of knowledge of how that job works.”

General Atlantic CEO Bill Ford said the Republican candidate would be “very good for business, not just in the United States, but I think here in the Middle East,” speaking to Al Arabiya’s Hadley Gamble. “How people are talking is completely different than three weeks ago,” UBS CEO Sergio P. Ermotti said at a Semafor event last week, a sentiment echoed by Ken Langone, the founder of Home Depot and a recent Trump convert. According to polls, Kamala Harris and Trump are in a dead heat.

Saudi eyes China in chemicals push

Saudi Arabia is pursuing stakes in chemical companies abroad, especially in China, to secure demand for its oil as the world transitions from fossil fuels. “We will be using oil-to-chemicals, domestically and abroad,” Saudi Energy Minister Prince Abdulaziz bin Salman said at FII. Saudi Aramco is in talks to buy a 10% stake in China’s Hengli Petrochemical, Bloomberg reported, and is targeting other deals in China.

Most industry experts — with OPEC the notable exception — see oil demand peaking within a decade. Slack demand and rising supply has been a drag on prices: Brent crude traded at $71 a barrel on Wednesday, down 6% since Friday.

Engineers assess NEOM from above

Saudi Arabia would need to accelerate construction hugely to complete The Line by its stated target: That’s the assessment of a civil engineer who examined Google Earth satellite images to determine progress at NEOM. Industry publication New Civil Engineer consulted two engineers — both professors with experience on Saudi development projects — for their opinion on progress. They noted physical challenges like mountains and thermal expansion and concrete shrinkage in an area with some seismic activity, as well as the sheer demand for steel and concrete which may not be feasible in the proposed timeline.

One said that for The Line to be completed on time, it would need to be constructed at 15,000-times the rate of normal UK construction times. But the other counselled not to count out the kingdom: “You should never underestimate the Saudis with regard to the rate at which they can build something.”

Oil

• Saudi Aramco CEO Amin Nasser is more bullish on oil demand in the fourth quarter than OPEC. He predicted demand to average 106 million barrels a day — bringing the annual daily average to 104.5 million barrels — almost 400,000 barrels more than OPEC’s latest forecast.

FDI

• The United Arab Emirates was the largest investor in Saudi projects in 2023, accounting for nearly 19% of the total foreign direct investment, data from the Investment Ministry showed. Trade between the two countries was a record $87.3 billion last year, up 25% since 2019. — Zawya, Asharq al-Awsat

Resources

• Saudi mining company Ma’aden is working to make “mining cool again” to try to attract young minds, said CEO Robert Wilt at FII. The company is not “trying to splash money around” by announcing big projects, but is working to grow at a sustained pace as minerals like copper and nickel swell in importance for the global energy transition.

Amena Bakr is a senior analyst at Energy Intelligence Group.

You might not know it reading the news or following X, but Kamala Harris has firmed up her closing message. So has Donald Trump. And they are hammering swing state voters with simple, direct arguments even as the media cycle spins out of control, Semafor’s David Weigel wrote. But the topics they’re focused on most might not be what you think they are.