JPMorgan CEO Jamie Dimon, Citigroup’s Jane Fraser and other top names on Wall Street are in Saudi Arabia Tuesday for an investment conference as they try to look beyond risks that the Israel-Hamas war could widen into a regional conflict and deal a new blow to the global economy.
Dubbed “Davos in the Desert,” the annual Future Investment Initiative (FII) will welcome about 6,000 participants from more than 90 countries over the next three days. Now in its seventh year, the event has retained its appeal despite US Secretary of Defense Lloyd Austin warning Sunday about “potential escalation” in the Middle East and possible attacks on American interests.
Since the Hamas assault on October 7, Israel has widened its offensive against the Palestinian militant group and other regional enemies. The Israel Defense Forces have intensified their bombardment of the besieged Gaza Strip, striking Hezbollah cells in Lebanon and targets in the occupied West Bank.
Despite the escalating conflict, scores of senior executives stuck with plans to head to Riyadh over the coming days to meet with clients and speak on panels at the FII.
Other notable names attending include Blackrock’s (BLK) Larry Fink, Goldman Sachs (GS) CEO David Solomon, HSBC (HSBC) CEO Noel Quinn, billionaire hedge fund founder Ray Dalio and private equity executives Stephen Schwarzman and Harvey Schwartz of Blackstone (BX) and Carlyle (CG) respectively.
But several participants sounded a gloomy note on the global economy during a discussion Tuesday, as conflict threatens to further depress activity already being squeezed by the impact of recent aggressive interest rate hikes.
“We’re sitting here with a backdrop of the aftermath of… the terrorist attack in Israel and the events that have been unfolding since and it’s desperately sad. So it’s hard not to be a little pessimistic given that,” said Fraser of Citigroup (C).
Fink said that if the wars in Israel and Ukraine are not resolved it will lead to greater fear and insecurity and less hope in society. “When there’s less hope we see contractions in our economies,” he noted.
Saudi Arabia’s sway
But the turnout for the event underscores that investors remain interested in the Middle East, which saw some of the strongest rates of economic growth globally in 2022.
There’s another powerful draw card: Saudi Arabia’s enormous sovereign wealth fund. The Public Investment Fund (PIF) has grown in importance as a global investor, particularly as high interest rates and rising geopolitical tensions dampen the appetite for risk taking among institutions in Europe and the United States.
People are heading to the conference because “that’s where the money is,” said Karen E. Young, a senior research scholar at Columbia University’s Center on Global Energy Policy. “For many people who are seeking an investment from the PIF, this is the place you have to be,” she told CNN.
The fund has seen its assets under management soar to approximately $700 billion, from $250 billion in 2018, according to Goldman Sachs.
Its portfolio of international investments span Uber (UBER), US electric car company Lucid (LCID) and India’s Jio Platforms and Reliance Retail.
The PIF was also one of the first — and the biggest — investors in Softbank’s Vision Fund, which has backed dozens of startups since its inception in 2017, including WeWork and Slack.
Money in the Middle East
The fund’s growing clout has helped the Future Investment Initiative weather its fair share of geopolitical storms since launching in 2017. Last year, the event took place amid a very public spat between Riyadh and Washington over oil production cuts orchestrated by Saudi Arabia and its OPEC+ partner Russia.
And in 2018, dozens of top business leaders boycotted the conference as questions swirled over the Saudi government’s role in the killing of dissident journalist Jamal Khashoggi inside the Saudi consulate in Istanbul.
Saudi Arabia’s crown prince Mohammad bin Salman, denied any personal involvement in Khashoggi’s murder but later confirmed it was carried out by Saudi officials.
Bin Salman chairs the Public Investment Fund. He has also been at the center of efforts to normalize relations between the Kingdom and Israel, saying last month that a pact would be “the biggest historical deal since the Cold War.”
Last week, bin Salman urged “all possible efforts to prevent the expansion of violence that will affect the stability of the region,” and stressed the “importance of working to create conditions for the return of stability and the restoration of the path of peace to ensure that the Palestinian people obtain their legitimate rights,” according to the state-run Saudi news agency SPA.
Among those not attending the FII this week is Softbank CEO, Masayoshi Son. A spokesperson for the company said this was due to a “family health matter,” without providing further details.
“Very few people” had canceled plans to attend the conference, according to Richard Attias, the CEO of the FII Institute, the event’s organizer.
“The Middle East is the new emerging economy, the new emerging hub and people know that,” he said in comments posted to the SPA’s X account.
There could be another, more practical reason why people are sticking with the event, according to Young of Columbia University: the price of tickets, which come in at around $15,000 per person, excluding the cost of flights and accommodation. “Firms have invested to come… It is not a small fee,” she said.
— Winston Lo and Michelle Toh in Hong Kong contributed reporting.
