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Foreign investors flock to flagship Saudi economic conference

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A delegate arrives at the King Abdulaziz Conference Centre in Saudi Arabia’s capital Riyadh to attend the Future Investment Initiative (FII) forum.

Fayez Nureldine | Afp | Getty Images

Thousands of financiers, founders and investors are set to descend on the Saudi capital of Riyadh for the eighth edition of the kingdom’s Future Investment Initiative, the flagship economic conference at the heart of Vision 2030 — the multi-trillion dollar plan to modernize and diversify Saudi Arabia’s economy.

Described in past years by some attendees as a bonanza for Saudi cash, fund managers who spoke to CNBC this year draw a distinctly different picture as the kingdom simultaneously upholds more requirements for prospective fundraisers and investors, while also facing a revenue crunch amid lower oil prices and production.

“Without question, it’s gotten way more competitive to attract money from the kingdom,” Omar Yacoub, a partner at U.S.-based investment firm ABS Global, which manages nearly $8 billion in assets, told CNBC. “Everyone and anyone has been going to ‘kiss the rings,’ so to speak, in Riyadh.”

“Competition for capital has heated up, combined with other factors such as Saudis always having a ‘home bias’ towards investing, plus the broader dynamic of a tighter budget throughout the kingdom due to lower oil prices,” Yacoub said. “This has meant that investing internationally has become much more selective.”

As Saudi Arabia moves full steam ahead with its focus on domestic investment, it’s introduced more stringent conditions for foreigners coming to the kingdom to take capital elsewhere. The kingdom’s $925 billion sovereign wealth fund, the Public Investment Fund, saw its assets jump 29% to 2.87 trillion Saudi riyals ($765.2 billion) in 2023 — and local investment was a major driver.

Analyst discusses Saudi Arabia's $100-per-barrel oil price target

Saudi Arabia’s recently-updated Investment Law seeks to attract more foreign investment as well — and it’s set itself a lofty target of $100 billion in annual foreign direct investment by 2030. Currently, that figure is still a long way from that goal as foreign investment has averaged around $12 billion per year since Vision 2030 was announced in 2017.

“It’s no longer about ‘take our money and leave’ — it’s about adding value,” said Fadi Arbid, founding partner and chief investment officer of Dubai-based investment manager Amwal Capital Partners. “Value meaning hiring, developing the asset management ecosystem, creating new products, bringing in talent, and investing in Saudi capital markets also. So it’s multi-faceted investment, not only a pure financial transaction. It’s beyond that.”

‘More disciplined, more rational’

At the same time, the kingdom is taking clear steps to scale back spending, as oil prices fall well below its fiscal breakeven figure and it continues with crude production cuts agreed upon by OPEC+.

That fiscal breakeven oil price — what the kingdom needs a barrel of crude to cost in order to balance its government budget — has risen sharply as Saudi Arabia pours trillions of dollars into giga-project NEOM.

The IMF’s latest forecast in April, put that breakeven figure at $96.20 for 2024; a roughly 19% increase on the year before, and about 28% higher than the current price of a barrel of Brent crude, which was trading at around $72.75 as of Monday morning.

“I don’t think Saudi has the same means that they had literally two years ago,” one regional investor, who requested anonymity in order to speak freely, said. Nonetheless, they added, the kingdom “remains one of the very few countries that still have money to give. It might be somewhat on pause today, but … now it’s more disciplined, more rational.”

Watch CNBC's full interview with Saudi Investment Minister Khalid Al Falih

Some fund managers with years of experience in the Gulf suggested it may be too little too late for many of the investors making their first forays to the kingdom.

“You should have started that process two, three, four years ago,” Arbid said. However, he added, “For those that are coming in queue now, that doesn’t mean that they shouldn’t position — because it’s a cycle, right? But now, I think they’re more deliberate about it — they say you need to commit to the country.”

One example is the kingdom’s headquarters law, which went into effect on Jan. 1, 2024, and requires foreign companies operating in the Gulf to base their Middle Eastern HQ offices in Riyadh if they want contracts with the Saudi government.

In the shadow of regional war

Saudi Arabia's non-oil growth is proving to be 'robust,' economist says

“Saudi has done a phenomenal job recently of shielding itself from geopolitical events,” Arbid said.

That is also aided by the fact that local investors make up the majority of market participants, and local investor confidence is strong. The Tadawul All Shares Index, Saudi Arabia’s leading stock market index, is up 16.48% in the last year.

Still, some analysts in the region warn that the expanding crises in the Middle East have the potential to cause further instability.

“The war has gradually escalated to the point where there is a de-facto regional war,” Aziz Alghashian, director of research at the Observer Research Foundation Middle East, told CNBC. “The ongoing war is not only a geopolitical crisis, but the continuation of it has potential to create more radicalization in and around the region.”

“Attracting FDI and tourism, while maintaining oil prices at a desired level, are key for keeping Saudi Arabia’s mega projects and diversification plans on track,” Alghashian said.

“This of course is complicated by regional war, and so economy and security go very much hand in hand.”

Economics

Trump tariffs could cause summer economic slump: Chicago Fed president

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Austan Goolsbee, President and CEO of the Federal Reserve Bank of Chicago, speaks to the Economic Club of New York in New York City, U.S., April 10, 2025. 

Brendan McDermid | Reuters

Business owners and CEOs are already stocking up on inventory, and some American shoppers are panic buying big-ticket items in anticipation of President Donald Trump’s tariffs. The sudden buying binge could cause an “artificially high” level of economic activity, said Federal Reserve Bank of Chicago President Austan Goolsbee.

“That kind of preemptive purchasing is probably even more pronounced on the business side,” Goolsbee told CBS’ “Face The Nation” on Sunday, adding: “We heard a lot about preemptive building-up of inventories that could last 60 days, 90 days, if there [was] going to be more uncertainty.”

Businesses stockpiling inventory and consumers accelerating their purchasing decisions — buying an Apple iPhone now, say, rather than waiting until the fall — may inflate U.S. economic activity in April and lead to a slowdown in the coming months, Goolsbee suggested.

“Activity might look artificially high in the initial, and then by the summer, might fall off — because people have bought it all,” he said.

Sectors affected by Trump’s tariffs, particularly the auto industry, are most likely to heavily stock up on inventory now before import levies on goods from other countries potentially rise further, said Goolsbee. Many car parts, electronic components and other big-ticket consumer items are manufactured in China, for example, which currently faces a 145% total tariff rate on goods imported to the United States.

Trump’s tariffs on a bevy of other countries are currently in the middle of a 90-day pause, with a 10% baseline tariff rate instead applying to all imported goods across the board. The pause is due to expire on July 9, with Trump touting a series of rate negotiations with foreign leaders between now and then.

“We don’t know, 90 days from now, when they’ve revisited the tariffs, we don’t know how big they’re going to be,” Goolsbee said.

Some U.S. business owners who buy goods manufactured in China say they already can’t afford to place rush orders on inventory. Matt Rollens, owner and CEO of Granite Bay, California-based novelty drinkware company Dragon Glassware, says he’s temporarily holding his products in China because paying the 145% levy would force him to raise consumer prices by at least 50%, likely drying up customer demand.

Rollens has enough inventory in the U.S. to last roughly until June, and hopes the tariffs will be rolled back by then, he told CNBC Make It on April 11.

Short-term uncertainty and financial pain aside, the Fed’s Goolsbee expressed optimism about the country’s longer-term economic outlook.

“If we can get through this, it’s important to remember: The hard data coming into April was pretty good. The unemployment rate [was] around steady full employment, inflation [was] coming down,” he said. “It’s just a desire of people expressing they don’t want to back to ’21 and ’22, at a time when inflation was really raging out of control.”

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