SAMA's Quiet Pivot: Why Saudi Arabia Is Pulling Billions from Global Asset Managers

Saudi Arabia's central bank, the Saudi Central Bank (SAMA), is executing a notable strategic pivot with its foreign reserves. In recent months, SAMA has taken two actions that appear contradictory at first glance: it has accumulated reserves to multi-year highs while simultaneously pulling billions of dollars from global asset management firms. This dual move signals a deeper shift toward a liquidity-first, capital-preservation posture, with significant implications for global markets and asset managers.

SAMA's Dual Reserves Strategy: Build the Buffer, Shift the Composition

SAMA's foreign reserves have been on a steady upward trajectory. By the end of 2025, reserve assets reached SR1.73 trillion ($461 billion), a 5.3% year-on-year increase . In January 2026, reserves hit a six-year high of SR1.78 trillion ($475 billion), up 10% annually . By March 2026, the figure surged again to SR1.86 trillion ($496 billion) — the highest level since February 2020, representing a 9.4% year-on-year jump .

At the same time, SAMA has withdrawn billions of dollars from at least two international asset management firms, according to Bloomberg sources familiar with the situation . The withdrawn capital is being reinvested into more liquid, capital-preserving assets rather than managed external mandates .

Foreign securities investments — which accounted for 56.6% of total reserves in March 2026 — grew 9.2% year-on-year to SR1.05 trillion, while deposits held with banks abroad surged 36.3% annually to SAR 460 billion in January 2026 .

The Strategic Shift: From Active External Mandates to Liquidity-First Posture

SAMA is moving away from an active external mandate model toward a liquidity-first, capital-preservation posture. The strategy is to build a bigger total buffer while concentrating more of it in direct, highly liquid instruments rather than outsourced, longer-duration mandates.

The central bank is prioritizing capital preservation and maintaining the riyal's peg to the U.S. dollar over yield-seeking external investments . Local Saudi banks face liquidity strain from heavy lending, and SAMA is redirecting funds to ensure adequate domestic buffers . The withdrawals signal that SAMA is "becoming increasingly discerning in its investment strategies" after years of passive delegation to global firms .

Importantly, this is not a de-dollarization signal. SAMA's U.S. Treasury holdings actually rose 6% to $134.8 billion in January 2026, and the kingdom issued $11.5 billion in dollar bonds in early January, oversubscribed approximately 2.7 times . SAMA's governor stated in June 2026 that de-dollarization is a "gradual" process and not an abrupt shift, noting that the dollar constitutes 57% of global foreign exchange reserves .

Broader Geopolitical and Market Context

The strategic shift is unfolding against a backdrop of fiscal deterioration and geopolitical multi-alignment. Saudi Arabia ran a current account deficit of -3.1% of GDP in 2025, expected to widen to -3.2% in 2026 . The FY2026 budget projects a deficit of approximately SR165 billion (3.3% of GDP), with a borrowing plan of $57 billion to cover it . Allianz notes the Kingdom's "external position has been weakening over the past years" .

The European Parliament characterizes Riyadh's strategy as "multi-alignment" — balancing the long-standing U.S. security partnership while expanding ties with China, Russia, and the Global South . Regional conflict risks persist, with some analysts flagging reserve drawdowns from military spending, though SAMA's governor says buffers remain "adequate" .

Global market conditions add pressure. Global equity flows turned negative in early 2026 for the first time since January, signaling tightening liquidity amid prolonged geopolitical conflict . The Federal Reserve holding rates steady has added to macroeconomic uncertainty .

Implications for Global Asset Managers

SAMA's pivot carries multiple consequences for the asset management industry. As one of the world's largest sovereign reserve pools, the billions in assets under management being redeemed mean direct fee revenue loss for the affected managers (at least two firms, likely more under review) .

Other Gulf and emerging market central banks may follow SAMA's lead, demanding shorter lock-ups, higher liquidity, and more flexible terms — compressing margins for asset managers on sovereign mandates . The shift away from external mandates toward pure liquidity instruments signals that sovereigns are less willing to tolerate lock-up periods in private markets, alternatives, or long-duration fixed income during a period of geopolitical uncertainty .

Any asset manager with a significant SAMA relationship now faces reinvestment risk and the need to demonstrate superior liquidity management to retain the relationship . However, SAMA's increased direct holdings of U.S. Treasuries provide a liquidity backstop to that market, even as they reduce the pool of capital available for active management mandates .

Outlook

SAMA's dual strategy of building reserve buffers while concentrating holdings in liquid instruments reflects a cautious, defensive posture as Saudi Arabia navigates twin fiscal deficits, geopolitical uncertainty, and the financing demands of its ambitious Vision 2030 economic transformation. For global asset managers, the message is clear: sovereign mandates will increasingly favor liquidity and flexibility over yield, and the era of passive delegation to external firms may be giving way to more discerning, hands-on management.