The sharp pullback comes at a difficult time for the kingdom’s growth ambitions.  

Riyadh is targeting $100 billion in annual FDI by 2030 to help finance and accelerate the economic transformation envisaged under Vision 2030.

In doing so, it hopes to reduce the fiscal burden on the government and its sovereign wealth fund, the PIF, while also increasing the size of the private sector and bringing jobs and expertise into the country.  

However, Saudi bank lending to state-owned companies increased 18.4% year-on-year in August—three times the 6% pace of private-sector credit growth.  

Amid a growing strain on its public finances, the Finance Ministry last week raised its estimated 2026 budget deficit to SAR245 billion (4.9% of GDP) from SAR165 billion (3.3%) in the original budget issued at the end of last year. This is due to spending exceeding the original budget rather than a reduction in aggregate revenue.

In a report published on Tuesday, Moody’s noted how the recalibration of Vision 2030, announced in February this year, to focus on projects with the strongest returns and capital efficiency, will help reduce pressure on public finances.  

While high-profile mega-projects such as Neom are being restructured, the government is now prioritizing directing capital towards sectors with strategic value such as logistics, manufacturing, utilities, digital infrastructure, and AI.  

“By resequencing projects and preserving financial buffers, the government can sustain its diversification push while maintaining fiscal prudence,” the ratings agency said.  

However, volatility in oil prices and export capacity remain key risks, with Moody’s forecasting that Saudi real GDP will contract 3.3% this year, given the ongoing disruption of oil trade flows. 

Speaking at an energy forum in London on Monday, Saudi Aramco’s CEO Amin Nasser said the U.S.-Iran war had reduced oil supply from the region by nearly 3 billion barrels and that the world’s oil stockpiles are now “scarily thin”.  

Recent days have seen a major escalation in Yemen’s civil war, with Saudi-backed forces launching attacks to reverse recent Houthi territorial gains.  

On Tuesday, Yemen’s internationally recognized government said its forces had retaken several strategic positions along the western coast, including Mocha, Dhubab, and areas around the Bab el-Mandeb Strait. 

The Saudi-led coalition supporting the government has reportedly deployed 100 fighter jets conducting round-the-clock flights to help secure the strait. 

Meanwhile, the Houthis are reportedly retaliating by stepping up missile and drone attacks against Saudi targets including airports, military facilities, and an Aramco oil refinery.  

On Monday, Turkey, Pakistan, and Saudi Arabia agreed to rapidly deploy forces to Saudi Arabia in response to the Houthi attacks. The decision was made at an emergency meeting in Riyadh and marks the first use of their Mecca Alliance for Defence since it was signed on 7 August.  

Melissa Hancock

And as ever, thanks for reading, and do keep in touch with your thoughts and ideas.
melissa.hancock@fortune.com 

Spotlight shifts onto secondaries 

Can the secondaries market help unlock MENA's liquidity challenge?  

During the course of the last week, more than 35 tech founders from across MENA have descended on London to connect with global investors as part of Key Trek 2026—a weeklong program designed to connect the region’s founders with international capital and help fuel their next phase of growth.

MENA’s tech VC ecosystem is increasingly facing a liquidity squeeze driven by weaker international investor participation, geopolitical uncertainty, and a lack of meaningful exits.  

The program was organized by Key Capital, a UAE-based dedicated VC secondaries asset manager established in 2024, which aims to improve the paths to liquidity in the Gulf.  

“As someone who has worked in VC investing for over two decades, I’ve become increasingly aware of the liquidity struggle that tech companies are facing,” Basil Moftah, the managing partner of Key Capital, told me last week on the sidelines of one of their events.

“Being one of the first in this space means we’re seeing a lot of great opportunities across the market and that we can set our own criteria of where and how we execute.”  

In May this year, the firm joined forces with SHUAA Capital to launch Key Fund I, a $50 million fund targeting investments in high-growth technology companies by buying secondary stakes directly from existing shareholders.  

Key Capital estimates the regional secondaries market is worth approximately $1 billion. By contrast, global secondary transaction volumes reached a record $240 billion in 2025, according to Jefferies. 

However, regional appetite for secondaries is gaining momentum, fueled by the growing demand for liquidity and an expanding presence of international fund managers in the region.  

Global private markets firm Pantheon’s decision last week to open an Abu Dhabi office highlights the growing importance of the Gulf as a secondaries market.  

The firm, a pioneer in private equity secondaries since 1988, has since broadened its focus to include private credit and infrastructure secondaries. 

Meanwhile, leading Gulf sovereign wealth funds, such as Abu Dhabi Investment Council, are actively building out dedicated secondaries capabilities—establishing distinct investment functions with dedicated teams and proprietary capital, rather than relying solely on external managers. 

In March this year, a unit of the Abu Dhabi Investment Authority and private markets firm Ardian, launched a real estate secondaries platform to capitalize on opportunities created by a reset in valuations and increased demand for liquidity.   

Such developments point to a secondaries market that is moving from a largely private and fragmented source of liquidity into a more established part of the region’s capital ecosystem.  

You can read my full interview with Moftah here, where he shares insights on Key Capital’s investment strategy and the first mover advantage this is giving the firm.  

Gulf sovereign funds defy war

Mubadala leads Gulf sovereign funds’ investment spree 

The majority of Gulf sovereign wealth funds look set to invest more in 2026 than their average annual deployments between 2020-2025 as they continue to invest both at home and overseas.  

In the first nine months of 2026, regional sovereign investors deployed $102 billion across 245 transactions, according to Global SWF, a platform that tracks sovereign wealth funds.  

If the current pace continues through year-end, regional funds are on track to deploy $136 billion in 2026, making it the second-highest year on record for dealmaking. 

Abu Dhabi’s Mubadala, which has $385 billion assets under management, led the charge with $26.2 billion invested to the end of September.  

This figure includes the capital deployed by subsidiaries ADIC, Mubadala Capital and MGX, which was active in the multi-billion financing rounds of OpenAI, Anthropic and Databricks.  

Mubadala is followed by Saudi’s Public Investment Fund (PIF) ($14.0 billion), Abu Dhabi Investment Authority ($12.2 billion), Abu Dhabi’s L’IMAD ($10.8 billion), and Qatar Investment Authority ($10.3 billion). 

Last month, the U.S. Federal Communications Commission (FCC) approved plans for PIF, L’IMAD and the QIA to exceed the foreign ownership cap in the $111 billion Paramount-Skydance-Warner Bros. Discovery merger.  

The trio of funds has reportedly committed a combined $24 billion to help finance the acquisition, thereby providing around half of the $47 billion in equity financing for the transaction.  

Gulf sovereign investors now employ over 12,000 staff. PIF ranks as the world’s largest SWF in terms of personnel, with 3,321 staff, 86% of them Saudis. 

OpenAI in funding talks with UAE

OpenAI looks to the UAE’s deep pockets for new funding 

OpenAI is reportedly in talks with several UAE investment funds, including Abu Dhabi-based MGX, to anchor a $30 billion fundraising round for the company.  

The UAE funds may invest as a consortium and are discussing a combined investment of up to $10 billion, Bloomberg reported.  

BlackRock, the world's largest asset manager, is also discussing participating in the funding round.  

OpenAI is reportedly targeting a valuation of roughly $1.4 trillion. If true, it represents a sizeable increase in just a matter of months. OpenAI raised $122 billion in March at an $852 billion valuation.  

MGX, an investment firm which specialises in technology investments, has previously participated in funding rounds for both OpenAI and Anthropic.  

Led by Chairman Sheikh Tahnoon bin Zayed Al Nahyan and backed by Mubadala Investment Co. and G42, the firm was established in March 2024 and has rapidly carved out a reputation as one of the boldest investors in AI.  

Today, it boasts a diverse portfolio spanning cutting-edge AI models, semiconductor infrastructure and data centers. 

Last month, reports emerged that an investor group, which comprises the BlackRock-backed ⁠Artificial Intelligence Infrastructure Partnership in which MGX is an investor, is in talks to ​buy Stack Infrastructure's Asia Pacific data center portfolio for ‌up to $25 billion.  

MGX is also an investor in Stargate, a $500 billion joint venture between OpenAI, Oracle and SoftBank. 

Construction on the first phase of the project, a $30-billion, 1-gigawatt compute cluster known as Stargate UAE, began last year with the first 200 megawatts of capacity due to come online this year.  

Notably, in June this year, MGX raised almost $50 billion from regional and global investors to ramp up spending on AI infrastructure and technology. 

This sets the firm apart from other Gulf sovereign wealth funds, which primarily rely on government capital for their investments. 

The Big Number

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Iran loaded no crude oil onto tankers in September, a clear indication that the U.S. naval blockade is choking the Islamic Republic’s access to global energy markets. Data compiled by Bloomberg shows crude loadings fell from roughly 250,000 barrels per day in August to zero in September, marking the first such instance since the war began in February.   

The 3 things we enjoyed reading this week

• Oil tanker captains in the Gulf are being paid extraordinary sums—equivalent to $100,000 a month, along with a $50,000 bonus—to take vessels through the Strait of Hormuz amid the Iran conflict, the FT reports. Because most vessels make repeated shuttle trips through the strait, sailors can command these premium rates for months at a time, while enduring the ever-present threat of Iranian missile and drone attacks. At least 14 attacks have taken place since September 20, according to maritime security company Vanguard, including four vessels struck since Saturday. A typical voyage into the Gulf, including loading and the return journey, takes about four days, but only a small number of ships are willing to make the trip.  

   

• The latest developments in Yemen represent the most significant escalation in the conflict since the UN-brokered truce in 2022. As this Al Jazeera opinion piece argues, the war was largely managed as a frozen conflict for four years—but now, both sides are seeking to reshape the balance of territory and power. The western coast is where the military campaign will be won or lost; as Iran disrupts shipping through the Strait of Hormuz, the Red Sea has emerged as a vital strategic lifeline for the Gulf. However, the Houthis’ calculations now extend far beyond Yemen, increasingly shaped by Tehran’s war and its negotiations with Washington. Even major battlefield setbacks may not push the group towards compromise if its leadership believes any concessions should be part of a broader regional bargain. 

   

• Seven Arab countries have submitted films for the Best International Feature category at the 2027 Oscars. The entries span genres from horror and thriller to family drama and documentary, tackling subjects including Algeria’s civil conflict, Lebanon’s banking crisis, ISIS, migrant-worker exploitation, and life in Gaza. Several are already premiering at major festivals, including Venice and Cannes. The 15-film shortlist is due on December 15, with the final five nominees announced on January 21 next year.