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Saudi wealth fund plans to reduce overseas investments

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PIF Governor Yasir Al-Rumayyan speaking at Riyadh

conference

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Says fund aims to focus more on domestic economy

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Global business, finance leaders attending FII summit

(Updates with Elon Musk comments in paragraphs 18-21 and Mizuho

CEO comments in 10)

By Hadeel Al Sayegh, Iain Withers and Anousha Sakoui

RIYADH/LONDON, Oct 29 (Reuters) - Saudi Arabia's

sovereign wealth fund plans to cut its overseas investments by

about a third, its governor told a conference in Riyadh on

Tuesday, as the Kingdom taps into its resources to fund plans to

wean the economy off oil.

Speaking on a panel of business, technology and finance

leaders, Public Investment Fund Governor Yasir Al-Rumayyan said

the sovereign wealth fund was more focused on the domestic

economy and aiming to bring the fund's international investments

down to between 18% and 20% of the total from 30%.

Global business, technology and financial leaders have

converged on the Saudi capital for the annual Future Investment

Initiative (FII) summit, an opportunity for attendees to forge

relations with some of Saudi Arabia's biggest companies and its

$925 billion sovereign wealth fund.

This year, the event may also test investor appetite in

Saudi Arabia's economic transformation at a time when there are

fears of widening conflict in the Middle East.

The sovereign wealth fund is the main vehicle for Crown

Prince Mohammed bin Salman's plans to steer the Saudi economy

away from oil, with investments of hundreds of billions of

dollars to develop new sectors and create more sustainable

revenue streams.

However, the fund has been scaling back some of its flagship

"giga-projects" due to rising costs.

Al-Rumayyan said there had been a shift in the way the fund

deploys its investments towards establishing joint ventures with

both international and local companies.

"Now we see a shift from people who want us to invest or

take our money to invest from there to co-investments," he told

the conference.

The country's investment minister, Khalid-al-Falih, said on

Tuesday that the number of foreign companies with regional

headquarters in Saudi Arabia had reached 540, ahead of a 2030

target of 500.

An example of one will be Mizuho Bank, whose CEO Masahiko

Kato said: "we will establish a regional headquarter in KAFD, in

Riyadh."

Oil remains the mainstay of the Saudi economy and Energy

Minister Prince Abdulaziz bin Salman told the same event that

the country was committed to maintaining crude capacity at 12.3

million barrels per day.

Other high-profile speakers on Tuesday included Stephane

Bancel, CEO of Moderna ( MRNA ), Alphabet President

and CIO Ruth Porat, and the CEOs of several of the biggest banks

including Citi, Goldman Sachs ( GS ) and Morgan Stanley ( MS )

.

Artificial intelligence, the upcoming U.S. presidential

election and the economic outlook were the main topics, and

there was almost no mention of wars in the region on those

panels.

However, economist Jeffrey Sachs of Columbia University gave

a speech that was critical of the United States and Israel.

"We don't need artificial intelligence in war, we need human

intelligence to stop the wars," he said to applause.

Sachs said Israel and the U.S. were blocking the

establishment of an independent Palestinian state.

"Until there is (a Palestinian state), there is going to be

no peace in the region," he said speaking of wars in Gaza and

Lebanon and concerns there may be a wider regional conflict.

Elon Musk also joined the conference via videolink where he

spoke about population decline, the need for "maximally truth

seeking" artificial intelligence, and timing for sending space

ships to Mars. He said he believed instead some AIs were being

trained to be politically correct, with some being built with a

"woke, nihilistic, in my opinion, philosophy."

He estimated that by 2040, there could be billions of

humanoid robots, priced between $20,000 to $25,000. That

development could multiply the valuation of Tesla,

according to Musk.

"Robotic taxis makes Tesla about a $5 trillion company,"

Musk said. "The Optimus Robot, I think, makes Tesla a $25

trillion company."

The Optimus robot is the humanoid robot under development by

Tesla.

U.S. ELECTION

With just a week to go until America elects a new president,

several panelists were asked who was more likely to win.

Citadel CEO Ken Griffin said that markets expected Donald

Trump to beat Democratic Vice President Kamala Harris on Nov. 5

but that the outcome remained "almost a coin toss".

Blackstone CEO Steve Schwarzman, who has endorsed Trump,

initially said he wouldn't comment on the election before saying

that Trump had a better understanding today of the how the

presidency works than in 2016.

There was also optimism about the global economy and among

the bank CEOs about an increase in corporate dealmaking next

year.

Ted Pick, Morgan Stanley ( MS ) CEO, told another panel that the

increase in activity would "be a global phenomenon", with bigger

companies going public. Goldman boss David Solomon said he also

expected more robust activity next year.

Apollo Global Management ( APO ) CEO Marc Rowan said a Trump

victory would boost merger and acquisition activity that had

been dampened by the current administration and lead to

investment liberalisation.

Several executives also voiced concern that inflation was

more embedded globally than believed, even as central banks

prepare to cut interest rates further.

BlackRock ( BLK ) CEO Larry Fink said that the central bank

policy "playbook" needed to be revisited because the

transmission of higher rates to slow the economy had a greater

lag as populations aged and due to changes in the housing

market.

"I do believe we have greater embedded inflation in the

world than we've ever seen," he said.