BlackRock, the world’s largest asset manager, is making strategic moves in the Kingdom of Saudi Arabia to expand its foothold in the Middle East. Led by CEO Larry Fink, the firm has been actively engaging with Crown Prince Mohammed bin Salman and was the first major global investment manager to establish an office in Riyadh, as reported by Bloomberg.
However, as BlackRock navigates the complexities of the Middle Eastern market, including geopolitical risks and ethical considerations, the question arises: Can BlackRock’s expansion drive the adoption of Exchange-Traded Funds (ETFs) in the Middle East?
BlackRock Eying a Piece of $925 Billion Saudi Fund
BlackRock’s decision to establish a presence in Saudi Arabia is part of a broader strategy to deepen its engagement with key regional stakeholders.
By directly interacting with Crown Prince Mohammed bin Salman, BlackRock is signalling its intent to play a significant role in Saudi Arabia’s economic transformation. Under the Vision 2030 plan, the kingdom aims to diversify its economy away from oil dependence and become a hub for innovation and investment in the Middle East.
One of the key attractions for BlackRock in Saudi Arabia is the opportunity to access the state-owned Public Investment Fund (PIF), which manages assets worth approximately $925 billion. By establishing a local presence, BlackRock is well-positioned to offer its asset management and investment strategies expertise to the PIF, potentially unlocking new avenues for growth and collaboration.
While Saudi Arabia presents lucrative investment opportunities, it also comes with challenges. The kingdom’s human rights record and reliance on oil revenues raise ethical and environmental concerns for investors. However, BlackRock’s CEO, Larry Fink, advocates for “corporate engagement” to drive positive economic and societal changes within the country.
Driving ETF Adoption in the Middle East
BlackRock’s expansion in Saudi Arabia could have broader implications for adopting ETFs in the Middle East. ETFs, which offer a diversified investment option to investors, have been gaining traction globally. However, the adoption of ETFs in the Middle East has been relatively slow compared to other regions.
BlackRock’s presence in Saudi Arabia could catalyze the growth of Bitcoin ETFs in the region, as it brings its expertise and global network to the table.
BlackRock’s innovative spirit shines through with the launch of its iShares Bitcoin Trust, showcasing the company’s strategic diversification efforts. Launched just this January, the IBIT has already seen an impressive $15.3 billion inflows, highlighting BlackRock’s ability to swiftly and effectively capitalise on market opportunities.
On April 15, BlackRock’s iShares Bitcoin Trust (IBIT) held 272,138.54 BTC, which increased to 272,548.58 BTC as of April 17. This growth contrasts with the slowing growth of Grayscale’s Bitcoin Trust (GBTC). If this trend continues, IBIT could surpass GBTC as the world’s largest spot bitcoin ETF, closing the gap.
