Saudi Arabia sells global assets to pay off debts

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The Corona pandemic has caused heavy losses to Saudi investments (Getty)

The Saudi Public Investment Fund (the sovereign fund) revealed the sale of its shares in major international companies, most of which are American, and the reduction of its contributions to other entities, in a new step that shows the Kingdom selling global assets in order to pay off debts and reduce the deep losses incurred by them, due to the repercussions of the new Corona virus pandemic on international markets.

And the US Securities and Exchange Commission announced that the Saudi sovereign fund has given up its stakes in the American companies Boeing, the aircraft giant, Qualcomm specializing in the field of communications systems, Breadcom operating in the field of semiconductors and wireless communications, the Starbucks coffee chain, Pfizer for pharmaceuticals, Facebook, Walt Disney Entertainment, IBM Technology, Bank of America, Citigroup Banking Group, as well as British Petroleum and French oil companies Total.

Likewise, the fund reduced its stake in Cisco Systems of American Technology by 53.5% to 5.8 million shares, and in the shares of the American Berkshire Hathaway Group, which owns a variety of companies, by 49% to 218,778 shares, and in Candian Natural Resources, by 43.1% to 17.1. One million shares.

The fund indicated that it had repaid a $ 10 billion loan it had raised last year, 2019, pointing to a study of its current and future foreign investment options.

The Corona pandemic has increased the financial pressure on Saudi Arabia, as it caused heavy losses to foreign investments that Crown Prince Mohammed bin Salman has adopted in recent years.

According to a statement issued by the Minister of Finance, Muhammad Al-Jadaan, last June, the Kingdom transferred a total of $ 40 billion from foreign reserves with the Saudi Arabian Monetary Agency to finance investments to the Public Investment Fund, in March and April, without giving further details. On the transfers, which he said took place “exceptionally”.

The Japanese Softbank Group reported, on May 18, that it recorded an annual operating loss of 1.9 trillion yen ($ 18 billion) in its giant Vision Fund, in which Saudi Arabia contributes a large share of nearly half, indicating the decline in the fund’s investments in the technology sector. Below the cost, the group recorded its biggest losses ever.

A vision fund was opened in November 2016 by the Saudi crown prince and Masayoshi Son, president of SoftBank Group. In May 2017, the fund became the largest direct investment fund, after raising more than $ 93 billion, of which about $ 45 billion came from Saudi Arabia. The UAE investment fund, Mubadala, also contributes to it.

In a report on May 17, the American “New York Times” reported that the Corona pandemic and the collapse of oil prices had negative effects on the aspirations and big dreams that bin Salman was planning.

Fund withdrawals to cover losses and fill the kingdom’s financial deficit were not limited to selling contributions to international companies, withdrawals from cash reserves and borrowing locally and internationally, but also extended to reducing investment in American debt instruments, in which Saudi Arabia is the largest investment in the Gulf states.

Data issued by the US Treasury Department showed that Saudi Arabia reduced its possession of treasury bonds by the end of last May, to $ 123.5 billion, compared to $ 184.4 billion in February.





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