Saudi wealth fund PIF joins Temasek of Singapore in reporting steep 2022 investment losses amid slump in US, China markets

Saudi Arabia’s US$778 billion sovereign wealth fund reports an US$11 billion loss from investment activities in 2022
Temasek to ‘apply a geopolitical lens’ to its investments, avoid areas that are in the cross hairs of US-China tensions, CIO Sipahimalani says

US-listed Chinese stocks

Jiaxing Li

Published: 4:30pm, 12 Jul 2023

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Two of the world’s biggest sovereign wealth funds lost a combined US$16 billion on their investments in 2022. Chinese stocks produced a mixed outcome, while US companies and Credit Suisse likely caused some of the biggest mark-to-market blows.

Saudi Arabia’s Public Investment Fund (PIF) incurred a loss of US$11 billion on investment activities last year, according to media reports on Wednesday, versus a US$19 billion gain in 2021. Temasek Holdings lost S$7 billion (US$5.2 billion) in the 1 months to March 2023, its worst annual results since 2016, the state investment firm said on Tuesday.

The losses underscored the challenges in navigating global stock markets in 2022 when the Federal Reserve began its policy “lift-off” with consecutive rate hikes throughout the year. The S&P 500 slumped 19.4 per cent last year, while the Hang Seng Index lost 15.5 per cent, erasing a combined US$8.8 trillion of value from their constituents.

People standing in front of an electronic sign showing the Hang Seng Index in November 2022. Photo: AFP

“In the challenging investment environment of 2022, sovereign wealth funds became more cautious and reduced their risk exposure,” the International Forum of Sovereign Wealth Funds said in a recent report. “This cautious approach was most evident in their retreat from emerging markets.”

The challenges of investing in China under the zero-Covid policy were “particularly stark,” it added.

PIF, which managed US$778 billion of assets, owned stakes in Alibaba Group Holding, BeiGene and PDD Holdings, according to its fourth quarter regulatory 13F filings. Alibaba, the owner of this newspaper, fell 26 per cent in New York trading while biotech firm BeiGene slumped 19 per cent. Alibaba’s e-commerce rival PDD gained 38 per cent last year.

The Saudi fund also owned minority stakes in SenseTime and Flat Glass Group, based on Hong Kong stock exchange filings. Both stocks tanked by more than 50 per cent in 2022.

Luxury electric-car maker Lucid Group, in which PIF has sunk in US$2.8 billion, is one of the Saudi fund’s US$35.6 billion bets on US-listed companies. The stock crashed 82 per cent in New York trading last year. PIF-backed lender Saudi National Bank held a 9.9 per cent in Credit Suisse, which slumped 68 per cent in 2022, before its eventual bailout in March this year.

Temasek’s CIO Rohit Sipahimalani speaks during their annual Temasek Review in Singapore July 11, 2023. Photo: Reuters

Meanwhile, Temasek suffered a rare net loss in 2022, citing mark-to-market erosion in its investments. The net value of its portfolio shrank by more than 5 per cent to S$382 billion.

The firm held depositary shares issued by eight Chinese companies, including Alibaba Group, JD.com and PDD Holdings, according to its 13F filings. It also wrote off a S$275 million bet on FTX, which it called “an aberration.” The cryptocurrency exchange has since filed for bankruptcy amid allegations of fraud.

“We need to apply a geopolitical lens to all our investments,” Rohit Sipahimalani, chief investment officer, said at a briefing on Tuesday. “For example, we won’t invest in areas that are in the cross hairs of US-China tensions. We’ll prefer to invest in companies that have access to large domestic markets.”

Additional reporting by Bloomberg and Reuters