UAE’s Royal Group is betting big against the U.S. stocks

By:
on May 10, 2023
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  • Royal Group has built a multi-billion-dollar short position in U.S. stocks.
  • It's betting on prospect of U.S. economy sliding into a recession this year.
  • S&P 500 is currently trading up roughly 8.0% versus the start of 2023.

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S&P 500 pared back its intraday gain on Wednesday following a Bloomberg report that Royal Group has built a multi-billion-dollar short position in U.S. stocks.

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What is Royal Group investing in instead?

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Based out of Abu Dhabi, the said investment firm is controlled by Sheikh Tahnoon bin Zayed Al Nahyan – the National Security Adviser of the United Arab Emirates. The particular stocks or sectors that it’s betting against remain unknown, though.

Royal Group turned its back on equities as fears of recession grew more prominent at the start of this year. Ever since, it’s been allocating more capital to the short-term U.S. Treasuries.

The conglomerate has been expanding its exposure to commodities and cryptocurrencies as well, the anonymous sources confirmed.

Royal Group declined to comment on the report today.

Factors that could weigh on U.S. stocks

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People familiar with the matter also said that Royal Group will likely go long on U.S. equities again once valuations improve and the central bank signals that it’s ready to cut rates.

In the meantime, though, it’s betting on the recent bank failures that are fuelling the fears of recession and weighing on the overall market sentiment. It’s also noteworthy that a potential recovery in oil prices could be another headwind for the S&P 500.

For now, though, inflation is running at an annualised rate of 4.9% in the United States, as Invezz reported HERE.

Last week, Citi also warned of a downside to 3,700 level in the benchmark index that, despite challenges, is trading about 8.0% up for the year at writing.

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