Saudi Arabia's sovereign wealth fund has snapped up around $8 billion worth of stakes in global giants – from Boeing to Facebook – in a spree that belies deep and unpopular austerity measures at home.
The twin shocks of the coronavirus pandemic and a plunge in oil prices have prompted the government to triple its value-added tax, suspend a monthly allowance to civil servants and slash spending as it seeks to tame a ballooning budget deficit.
The harsh measures are straining a so-called "rentier" social contract, which for decades saw the kingdom use its oil wealth to provide citizens with generous subsidies, jobs and a tax-free lifestyle.
Amid its worst economic crisis in decades, the seemingly contradictory state policy to splurge billions on overseas assets is raising eyebrows.
The kingdom's Public Investment Fund is emerging as one of the world's biggest bargain hunters, dishing out billions to buy minority stakes in American and European bluechip firms.
"You don't want to waste a crisis," PIF governor Yasir al-Rumayyan said in April, indicating the $300 billion fund was taking advantage of a virus-induced recession to snap up stakes at knockdown prices.
In the first quarter of this year, it bought $7.7 billion holdings in a host of companies – from Boeing, Walt Disney and Starbucks to Marriott and Citigroup.
It also took stakes in energy giants including Royal Dutch Shell and Total – a move at odds with Saudi policy to steer away from oil dependence – as well as Facebook, which has triggered privacy concerns from a US watchdog.
The PIF is also backing a proposed £300 million ($372 million) takeover of football club Newcastle United, though the deal looks to be in trouble over allegations that Saudi Arabia was behind a pirate sports broadcaster.
Spending 'nest egg'
The painful austerity drive could heighten public scrutiny of such spending – especially after VAT, introduced just over two years ago, is tripled to 15% from July.
"Companies are happy to see their stocks in demand and share prices buoyed," Karen Young, a scholar at the American Enterprise Institute, said.
"However, it is more important to think about how Saudi citizens view their savings and collective national nest egg being spent on international equity markets at a time of a national economic crisis."
Shopkeepers in Riyadh privately wonder why the crucial investments were not instead used to prop up struggling small and medium enterprises choked by the pandemic.
The investments are also unlikely to soothe concern among young Saudis worried about finding jobs amid already high youth unemployment.
In an absolute monarchy where few publicly question official decrees, columnist Khalid al-Sulaiman wrote in a pro-government newspaper that the austerity measures will have a "significant effect on society's purchasing power".
But not all agree. "A football club, entertainment, mega projects. Throwing money at all this is absolutely unnecessary at a time of deep austerity," said one Saudi government worker, who also works part-time for a ride-hailing app to supplement his income.
Such is the economic anxiety that some Saudis dubbed as "insensitive" a light-hearted video by entertainment chief Turki al-Sheikh, in which he breaks a television screen out of frustration after losing a Playstation game.
The central bank's foreign reserves saw a sharp fall in March and April, with the government saying $40 billion had been transferred to the PIF to fund its stake-buying spree.
The reserves, which tumbled to about $450 billion in April, a multi-year low, are expected to be further depleted to finance a growing budget deficit, analysts say.
De facto ruler Crown Prince Mohammed bin Salman has transformed the once-torpid PIF into a key investment vehicle to develop mega projects to diversify the oil-reliant economy, while also building an international portfolio of investments.
In a statement, the PIF described itself as a "patient investor with a long-term horizon".
"The PIF is making big bets on a few stocks," said Ali Shihabi, a Saudi analyst and author. "Smart or not, we'll only know when we look in the rear-view mirror."
Some of those "tactical" investments in undervalued assets, including the struggling cruise operator Carnival, chime with Saudi Arabia's goal of developing its tourism and entertainment sectors from scratch, Shihabi added.
The PIF reportedly struggled in the past to attract a cruise liner to the Red Sea, where the kingdom seeks to develop a mega tourism project as well as NEOM, a $500-billion futuristic megacity.
But many of the other acquisitions are "unlikely to yield a substantial return over the short run", said Robert Mogielnicki, a resident scholar at the Arab Gulf States Institute in Washington.
The Facebook investment has raised concern among US watchdogs after two former Twitter employees were charged last year with spying for Saudi Arabia.
"I'm particularly concerned about the large Facebook stock buy given that we already know the Saudis had agents at Twitter to spy on Saudi dissidents," Ben Freeman, a director at the Washington-based Center for International Policy, said.
"Would the company remove a disinformation campaign run by one of its stakeholders?"
Facebook did not respond to a request for comment.