Investment experts sound note of caution at FII summit opening

DUBAI: Yasir Al-Rumayyan, governor of Saudi Arabia’s Public Investment Fund (PIF), is concerned about the different valuation of financial and other assets that has been a feature of markets affected by the coronavirus (COVID-19) pandemic.
Speaking on the opening panel of the Future Investment Initiative (FII) from Riyadh, Al-Rumayyan said that the pandemic has revealed a “division between those with funds waiting on the sidelines and the working class” who had lost jobs during the economic recession.
He added that although PIF will continue to invest in financial assets, this year will see more emphasis on other asset classes, with the Kingdom leading the way in the next round of its economic diversification program.
“We will be investing not just in financial markets but also in the opportunities in real economies. We are looking at conventional economies, as well as future and new economies,” he said.
Al-Rumayyan told FII that he was worried about the high valuations of big technology companies, some of which are facing increased regulatory scrutiny, adding that he was concerned that the disconnect between financial and economic assets will end in a financial downturn.
His cautious note on markets in 2021 was echoed by David Solomon, chairman of US investment bank Goldman Sachs, who said that the ending of liquidity by the financial authorities was a risk.
“A reversal of fiscal and monetary trends might have an impact on this year’s markets,” Solomon said, but he believed that there would be a “very constructive” market in corporate takeovers and mergers.
Ray Dalio, founder of big US investment firm Bridegwater, was also wary about market prospects this year. “I don’t think equities will be as ebullient as last year. The weight of money and credit created to deal with the virus is working through the market.”