Saudi Arabia Withdrew Billions From Markets, Estimates Show

[Purveyor]

By Stefania Bianchi
September 28, 2015 — 4:04 AM EDT

Saudi Arabia has withdrawn as much as $70 billion from global asset managers as OPEC’s largest oil producer seeks to plug its budget deficit, according to financial services market intelligence company Insight Discovery.

"Fund managers we’ve spoken to estimate SAMA has pulled out between $50 billion to $70 billion from global asset managers over the past six months," Nigel Sillitoe, chief executive officer of the Dubai-based firm, said by telephone Monday. "Saudi Arabia is withdrawing funds because it’s trying to cut its widening deficit and it’s financing the war in Yemen," he said, declining to name the fund managers.

Saudi Arabia is seeking to halt the erosion of its finances after oil prices halved in the past year. The Saudi Arabian Monetary Authority’s reserves held in foreign securities have fallen about 10 percent from a peak of $737 billion in August 2014, to $661 billion in July, according to central bank data. The government is accelerating bond sales to help sustain spending.

"Foreign-exchange reserve depletion, rather than accumulation, is the new reality for Saudi Arabia," Jason Tuvey, Middle East economist at Capital Economics, said in an e-mailed note Monday. "None of this should come as much surprise," given the current-account deficit and risk of capital flight, he said.

Saudi Arabia’s attempts to bolster its fiscal position contrast with smaller and less-populated nations in the Arabian peninsular such as Qatar. The world’s richest nation on a per capita basis plans to channel about $35 billion of investment into the U.S. over the next five years as it seeks to move away from European deals. That’s on top of plans to set up a $10 billion investment venture with China’s Citic Group.

more...

http://www.bloomberg.com/news/articles/2015-09-28/saudi-arabia-has-withdrawn-billions-from-markets-estimates-show

[KamaAina]

1. They could start by not funding ISIS

[leveymg]

2. Hasn't effected the US market indexes, much. But, the plunge patrol has been at work.

After a certain point, KSA disinvestment will be a needle that deflates several bubbles. Qatar is interesting, as it's just as energy export dependent, but seems to be weathering the oil price plunge better. Lots more natural gas in their mix, though.

Petroleum and liquefied natural gas are the cornerstones of Qatar's economy and account for more than 70% of total government revenue, more than 60% of gross domestic product, and roughly 85% of export earnings. Proved oil reserves of 15 billion barrels (588,000,000 m3) should ensure continued output at current levels for 23 years. Oil has given Qatar a per capita GDP that ranks among the highest in the world. Qatar's proved reserves of natural gas exceed 7000 km3, more than 5% of the world total and the third-largest reserves of any country in the world. Production and export of natural gas are becoming increasingly important. Long-term goals include the development of off-shore petroleum and the diversification of the economy.

Saudi oil reserves are the second largest in the world, and Saudi Arabia is the world's leading oil exporter and second largest producer. Proven reserves, according to figures provided by the Saudi government, are estimated to be 260 billion barrels (41 km3), about one-quarter of world oil reserves. Petroleum in Saudi Arabia is not only plentiful but under pressure and close to the earth's surface. This makes it far cheaper and thus far more profitable to extract than oil at many other fields.[17] The petroleum sector accounts for roughly 92.5% of Saudi budget revenues,[16] 90% of export earnings, and 55% of GDP.

Another 40% of GDP comes from the private sector. An estimated 7.5 (2013) million foreigners work legally in Saudi Arabia,[18] playing a crucial role in the Saudi economy, for example, in the oil and service sectors. The government has encouraged private sector growth for many years to lessen the kingdom's dependence on oil, and to increase employment opportunities for the swelling Saudi population. In recent decades the government has begun to permit private sector and foreign investor participation in sectors such as power generation and telecom, and acceded to the WTO. During much of the 2000s, high oil prices[19] enabled the government to post budget surpluses, boost spending on job training and education, infrastructure development, and government salaries. More than 95% of all Saudi oil is produced on behalf of the Saudi Government by the parastatal giant Saudi Aramco, and the remaining 5% by similar parastatal companies as of 2002.

[Hortensis]

3. Any mention yet of how this might eventually force them to

sit down with us, and perhaps other states involved in destabilization of the Middle East, at the negotiating table? We don't want to destroy Saudi Arabia, after all, and I'm sure they know that.