BinZiad
23-08-2002, 18:11
Saudi investors move their capital out of United States
By James Politi, Julie Earle The Financial Times
NEW YORK: Moves by Saudi investors to shift tens of billions of
dollars out of the US have added to market concerns that global fund
managers are becoming increasingly disenchanted with the US, analysts
said on Wednesday.
Economists and bond strategists were on Wednesday considering the
impact of Saudi disinvestment on the dollar and US Treasury prices,
following an FT report that as much $200bn of Saudi money may have
left the US in the last few months amid deteriorating bilateral
relations.
"Watch for Middle Eastern asset switches out of US dollars into the
euro," UBS Warburg's London-based fixed-income team advised in its
daily note. "If a trickle becomes a flood, it could force the spread
[of US Treasuries to German bonds] wider in double-quick time."
David Brown, chief European economist at Bear Stearns, said if Saudi
holdings in the US were cut drastically and in a very short
time, "there could be an influence on the dollar".
Most banks, however, emphasised the relatively low level of Saudi
holdings of US assets, between $400bn and $600bn according to one
estimate, or equivalent to less than 1 per cent of total outstanding
US assets.
But Mr Brown said the question was "whether any Saudi disinvestment
is isolated, or part of a global move to reduce US exposure". The
latest figures on inflows to the US suggest a broader move away from
American investments.
By May this year, the 12-month rolling sum of net foreign buying of
US assets was down 14 per cent to $450bn, from a peak above $500bn
late last year, according to UBS Warburg.
Medlej al-Medlej, executive director of the US Saudia Arabia Business
Council in Washington, whose members include big oil companies like
Exxon Mobil as well as banks, said: "We are hearing that the US is no
longer the best place for Saudis to send their money. There is a
growing impression that the US is no longer a safe haven for
investment and we agree there must be some investors who are pulling
out of the US."
Mr al-Medlej said there was a perception that since the September 11
terrorist attacks, the US was no longer a safe haven. "I honestly
don't believe that the money moving from the US has anything to do
with politics, but with security, in terms of the trillion-dollar
lawsuits filed against Saudis after September 11 [by victims'
relatives]." Mr al-Medlej said there was "a huge amount" of Saudi
money in the US, mainly in equities and property. "We hear as much as
$600bn to $800bn, and I don't think a large portion of that is
leaving."
But not everyone agreed there had been multibillion outflows of Saudi
money. Peter Scaturro, chief executive officer of Citigroup private
bank, said his company's relationship with Saudi investors had not
changed. "We are not seeing any real change in clients in the Middle
East. We are in constant dialogue with them."
Thursday, August 22, 2002
By James Politi, Julie Earle The Financial Times
NEW YORK: Moves by Saudi investors to shift tens of billions of
dollars out of the US have added to market concerns that global fund
managers are becoming increasingly disenchanted with the US, analysts
said on Wednesday.
Economists and bond strategists were on Wednesday considering the
impact of Saudi disinvestment on the dollar and US Treasury prices,
following an FT report that as much $200bn of Saudi money may have
left the US in the last few months amid deteriorating bilateral
relations.
"Watch for Middle Eastern asset switches out of US dollars into the
euro," UBS Warburg's London-based fixed-income team advised in its
daily note. "If a trickle becomes a flood, it could force the spread
[of US Treasuries to German bonds] wider in double-quick time."
David Brown, chief European economist at Bear Stearns, said if Saudi
holdings in the US were cut drastically and in a very short
time, "there could be an influence on the dollar".
Most banks, however, emphasised the relatively low level of Saudi
holdings of US assets, between $400bn and $600bn according to one
estimate, or equivalent to less than 1 per cent of total outstanding
US assets.
But Mr Brown said the question was "whether any Saudi disinvestment
is isolated, or part of a global move to reduce US exposure". The
latest figures on inflows to the US suggest a broader move away from
American investments.
By May this year, the 12-month rolling sum of net foreign buying of
US assets was down 14 per cent to $450bn, from a peak above $500bn
late last year, according to UBS Warburg.
Medlej al-Medlej, executive director of the US Saudia Arabia Business
Council in Washington, whose members include big oil companies like
Exxon Mobil as well as banks, said: "We are hearing that the US is no
longer the best place for Saudis to send their money. There is a
growing impression that the US is no longer a safe haven for
investment and we agree there must be some investors who are pulling
out of the US."
Mr al-Medlej said there was a perception that since the September 11
terrorist attacks, the US was no longer a safe haven. "I honestly
don't believe that the money moving from the US has anything to do
with politics, but with security, in terms of the trillion-dollar
lawsuits filed against Saudis after September 11 [by victims'
relatives]." Mr al-Medlej said there was "a huge amount" of Saudi
money in the US, mainly in equities and property. "We hear as much as
$600bn to $800bn, and I don't think a large portion of that is
leaving."
But not everyone agreed there had been multibillion outflows of Saudi
money. Peter Scaturro, chief executive officer of Citigroup private
bank, said his company's relationship with Saudi investors had not
changed. "We are not seeing any real change in clients in the Middle
East. We are in constant dialogue with them."
Thursday, August 22, 2002