DUBAI: As Saudi Arabia’s anti-corruption purge sends the shares of some if its companies into a tailspin, the kingdom’s sovereign wealth fund has gained in value.

Last week the market value of the Public Investment Fund’s portfolio of Saudi equities jumped by almost $3 billion, Reuters calculations show, even as the arrest or questioning of more than 200 people in the probe caused stocks in many privately controlled firms to slump.

The share price of National Commercial Bank, for example, surged 8.7 per cent; Saudi Arabian Mining Co gained 4.7pc. They and the remainder of the PIF’s top 10 holdings rose, while the main stock market index moved sideways.

Some fund managers said government-linked funds – possibly the PIF itself – bought stocks in order to support the market and avert panic. The PIF did not respond to a request for comment on its market activity.

In addition, the managers added, money poured into PIF-related shares from other parts of the stock market as investors decided the fund was the safest bet, a sign of its growing importance in the Saudi economy.

“It is already arguably the country’s most important investor in so many aspects of the economy, from banking to transport,” said Sam Blatteis, chief executive of regional business advisory firm The MENA Catalysts.

“As a consequence of what’s happening, they may accelerate what they’ve been doing.” For most of its life, the PIF, established in 1971, was a low-key institution making low-interest, low-risk loans to industries which Riyadh wanted to develop.

That has changed under Crown Prince Mohammed bin Salman, architect of economic reforms designed to help Saudi Arabia escape its dependence on oil exports.

In the past two years he handed the PIF new responsibilities, including developing defence and tourism, undertaking huge real estate projects, creating a $500 billion business zone and raising returns on Saudi state money invested abroad.

Published in Dawn, November 14th, 2017