Wall Street and Tech Royalty attend Saudi Crown Prince’s event amid war

Saudi Arabia will play host to the biggest names in finance and technology next week, in a test of investor appetite for the kingdom’s ambitions to transform itself into a global hub at a time of rising regional conflict .

International executives will have to deal with a region roiled by geopolitical tensions, with the threat of further military confrontations between Israel and Iran at the highest levels in decades. And they will land in a country that is increasingly coming to terms with the fact that even its vast oil wealth has limits.

But those joining the Future Investment Initiative – often called Davos in the desert – appear undeterred, sensing an opportunity to tap into Crown Prince Mohammed bin Salman’s trillion-dollar Vision 2030 economic remake. David Solomon of Goldman Sachs Group Inc., Jane Fraser of Citigroup Inc. and Larry Fink of BlackRock Inc. have become regular guests at the Riyadh summit and will return this year.

Reflecting Saudi Arabia’s focus on technology and artificial intelligence, they will be joined by prominent names from those sectors. The president of Alphabet Inc. Ruth Porat and the CEO of TikTok Inc. Shou Chew will speak at the summit for the first time. Benjamin Horowitz, tech entrepreneur and co-founder of venture capital giant Andreessen Horowitz, also makes an appearance.

Wall Street and Silicon Valley have increasingly turned to the oil-rich Middle East as liquidity tightens in other parts of the world, especially China. Saudi Arabia itself has almost $1 trillion in sovereign wealth, although the crown prince wants the industrial titans to stop deploying that money abroad and instead help support his domestic ambitions.

Yet the backdrop is one of increasing uncertainty.

Saudi foreign policy has recently focused on lowering regional tensions, hoping that a more stable region will bring in foreign capital and technological knowledge. But the events of the past year have reminded us how volatile the region can be.

“The impact of regional instability on the prospects for foreign investment is entirely negative, with the possible exception of the defense industry,” said Gregory Gause, professor of international affairs at Texas A&M University. Capital is “not attracted to conflict areas, even if the country is not a direct participant in the conflict.”

It is fair to say that Saudi Arabia is still pushing ahead with its major development plans. Deals worth more than $28 billion are likely to be announced by executives around the world in the coming week, according to Richard Attias, CEO of the FII Institute.

Some of these will focus on AI, including possibly a new fund with Andreessen Horowitz that could grow to as much as $40 billion. The kingdom is also expected to announce a new company that will invest at least $10 billion to make Saudi Arabia a top global producer of hydrogen – a low-carbon fuel that could be key to the world’s transition to burning of fossil fuels.

Ahead of the event, General Atlantic said it is opening its first office in the Middle East – in Saudi Arabia – as it looks for more deals in the region.

Two exchange-traded funds will make their trading debut in Riyadh, giving Saudi investors access to Hong Kong stocks – a reflection of the kingdom’s growing ties with China as it seeks to boost investment flows with its biggest trading partner. Hong Kong’s Finance Minister Paul Chan and Belt and Road Commissioner Nicholas Ho will speak at the FII as some of Asia’s leading speakers.

Still, the regional conflict is undoubtedly weighing on global investor sentiment in the Middle East. Saudi Arabia, the Gulf’s largest economy, is feeling some of that.

The number of actively managed emerging market funds with exposure to Saudi Arabia had risen sharply until earlier this year, but stalled at around 56% as tensions between Israel and Iran escalated, according to Copley Fund Research. The data shows that the number of funds invested in the Saudi stock market fell slightly between March and September this year and the country is the third largest underweight after Taiwan and India.

Coupled with this, Crown Prince Mohammed has had to come to terms with the limits of even Saudi Arabia’s vast financial resources to fund his ambitions. The government, which is predicting shortages until at least 2027, has said some projects will have to be postponed.

At the same time, the Public Investment Fund, the kingdom’s powerful sovereign wealth fund chaired by the de facto ruler, is becoming an increasingly difficult place for foreign companies to raise money. An increased focus on domestic projects such as the $1.5 trillion Neom has global asset managers worried that the PIF will have less money to spend abroad.

“The FII has always been designed as a mechanism for investment in Saudi Arabia, but in reality it has been an opportunity for foreign executives to extract funding from the Kingdom,” said Zaid Belbagi, managing partner of political risk consultancy Hardcastle Advisory. “Sold out hotels at $500-1000 per night are indicative of continued international interest.”

Organizers of the Riyadh jamboree remain confident and around 7,000 people have registered to attend this year’s event. That is higher than the figures from last year’s summit, which took place days after the current conflict in the region began.

When asked what attendees were talking about ahead of the event, FII Institute’s Attias said the U.S. elections were top of mind. There are many executives who believe that developments in the Middle East depend on the outcome of the elections, he said in a television interview with Bloomberg on Monday.

Still, investors are coming “despite what is happening in the world,” Attias said. “The show must go on.”

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)