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The Financial Times reports that Saudi Arabia is selling Canadian assets as the kingdom escalates its response to Ottawa’s criticism of the arrest of a female activist.
The Saudi central bank and state pension funds have instructed their overseas asset managers to dispose of their Canadian equities, bonds and cash holdings “no matter the cost”, two people with direct knowledge of the orders said.
Third-party managers are estimated to be mandated to invest more than $100bn of Saudi funds in global markets, executives say. While the proportion of that figure invested in Canadian holdings would be “fairly small in absolute terms,” the asset sale sent a strong message, one of the people said.
The sell-off began on Tuesday and underlines how the Gulf monarchy is flexing its financial and political muscle to warn foreign powers against what it regards as interference in its sovereign affairs. “This is severe stuff,” said one banker.
Thus far, Saudi Arabia has begun a sell-off of Canadian holdings; expelled the country’s ambassador; frozen new trade and investment with Ottawa; suspended a student exchange programme to Canada; halted Saudi Arabian Airlines flights to the North American country, and; ended all medical treatment programmes in Canada
The row between Riyadh and Ottawa erupted after Chrystia Freeland, Canada’s foreign minister, called for the release of Samar Badawi, a prominent Saudi women’s rights activist who has family in Canada. Ms Badawi and another activist were arrested last week as part of a government crackdown against dissenting voices, human rights groups said.
In response to Ms Freeland’s criticism, Saudi Arabia expelled the Canadian ambassador, froze new trade and investment with the G7 member, suspended a student exchange programme and halted flights by state-owned Saudi Arabian Airlines to Canada. Riyadh on Wednesday said it was also suspending all medical treatment programmes in Canada and working to transfer Saudi patients out of the country.
The kingdom’s actions carry echoes of the measures Saudi Arabia and its regional allies have taken against Qatar since imposing a regional blockade on the Gulf state a year ago.
The Saudi Arabian Monetary Authority, the central bank, had foreign assets of $506bn in July, most of which are invested in US Treasuries. Pension funds such as the General Organisation for Social Insurance and the Public Pension Agency manage additional assets.
The Public Investment Fund, the Saudi sovereign wealth fund, also has $250bn of assets under management, including stakes in global companies such as Tesla and Uber, as well as local assets.
Furthermore, Eastern Canadian refineries import about 75,000 to 80,000 barrels per day of Saudi Arabian crude, said Judith Dwarkin, chief economist with RS Energy Group in Calgary, on Tuesday.
And soon Eastern Canada will have to buy their oil from the West. Talk about KARMA.