The Saudi golf doubts are hinting at more to come

LAST week, the golfing world got a billion-dollar shock when it emerged that Saudi Arabia’s Public Investment Fund (PIF) might be thinking about cutting its losses in LIV, the upstart PGA Tour challenger.

It was not the only locally backed sport to face a new reality in a Middle East dealing with the effects of the US-Israeli war with Iran.

PIF is also selling a majority stake in Riyadh’s Al Hilal Football Club to billionaire Prince Alwaleed Talal, while the kingdom is reportedly no longer planning to host the 2035 Rugby World Cup.

This retrenchment may be more nip-and-tuck than radical surgery in the overall scheme of things, given Gulf sovereign wealth funds have deployed a whopping US$28 billion of publicly disclosed investment in 2026, data provider Global SWF research revealed.

Yet, it could be a taste of more to come – as the war’s economic impact, coupled with the need to reinvest in defence and infrastructure, brings attention back to domestic needs.

On Apr 15, PIF head Yasir bin Othman Al-Rumayyan said: “Some deals and investments are being reviewed, whether due to the war or for reasons related to economic feasibility.

“The presence of war places greater pressure on the need to reposition certain priorities,” he added.

It is a potential new departure in a region that pretty much created the template of small, commodity-exporting countries raking in more petrodollars than could be spent at home.

From international real estate to US technology, Middle East funds have used their gushers of cash to boost soft power and diversify their economies away from oil.

SEE ALSO

From Thai jasmine rice to salmon: Singapore could see tighter supply of some foods amid Iran war

They accounted for more than 60 per cent of sovereign-wealth deal activity in 2024, Spanish institution IE University said.

Some kind of adjustment looks likely, now that the Gulf has financial holes of its own to plug, as opposed to past crises, when Western bankers went to the desert monarchies cap in hand.

The cost of repairing damage to local energy infrastructure from Iran’s missiles could near US$60 billion, consulting company Rystad Energy said.

Pressure persists despite increasing financial headroom

Meanwhile, the World Bank has cut the regional growth forecast in 2026 from 4.4 to 1.3 per cent because of war-related disruption.

Other outgoings will surely include more defence spending by states that are already among the biggest weapons buyers.

Air defences have performed well, but the safe-haven status of places such as Dubai will need bolstering.

Given the region boasts some US$6 trillion in sovereign assets and mostly low public-sector debt that puts America and Europe to shame, this probably will not mean a huge reversal of capital flows.

Some countries are reportedly increasing financial headroom via private-debt markets. But pressure persists.

The Strait of Hormuz, the waterway that carries a fifth of global oil supplies, remains closed.

For every week that stays the case, assuming an oil price of US$100 a barrel, the gross domestic product impact on Kuwait, Bahrain, Qatar and Abu Dhabi is -0.5 to -0.1 per cent, Fitch Ratings said, compared with the baseline.

Saudi Arabia might seem comparatively better off, given it has pipelines that bypass Hormuz.

Yet, it also has a large, young domestic population to look after, and the rising expense of its Vision 2030 plan – a strategic framework launched in 2016 to diversify its economy – to lessen its oil-revenue reliance.

Even before the war, officials were sounding a more cost-conscious note after running budgetary deficits since 2022.

PIF recently exited holdings in US-listed companies including Visa and Pinterest.

Raphael Magoariec, an expert on the geopolitics of sport, said the fund’s shift on some sports investments shows the war has increased expectations for it to deliver at home.

As for the United Arab Emirates, with a mostly expat population, the challenge is to retain the prewar status quo, especially for a Dubai that leans heavily on its non-oil economy – think tourism, leisure and hedge funds.

Its funds have been on a business-as-usual footing, as seen with deals such as International Holding PJSC’s purchase of Annabel’s, a posh London nightclub.

But it might need to spend a bit more at home to keep the expat faith. A little geopolitical shuffling may also take place.

Abu Dhabi is considering plans to consolidate Chinese assets held by two of its wealth funds in a new entity.

For now, experts and officials seem sanguine. Gulf stock markets have been pretty resilient in 2026.

Robert Mogielnicki, non-resident fellow at the Arab Gulf States Institute, said: “The Iran conflict will impact Gulf sovereign wealth funds.

“But I don’t see these funds pulling back seriously from global markets.”

At the start of the 1980s, Kuwait was the region’s pre-eminent financial centre, had a significant stock market and qualified for the Fifa World Cup.

A decade later, periods of falling oil prices and the Iraq war’s devastation had put paid to that.

The Gulf today is a long way from that unhappy place, but circumstances change sometimes. BLOOMBERG