The outrage over Jamal Khasnhoggi, the journalist who disappeared after walking into the Saudi Arabian consulate in Turkey, continues to affect tech stock across the world. Investors into tech funds are feeling the pain with bigger investment firms bearing the brunt. SoftBank, with the dozens of tech companies it has invested in, saw $22 billion of it’s stock wiped out over the past few days.
SoftBank shares fell almost 7.3 percent today, coming to rest on 9,251 yen at the close in Tokyo. This wiped out most of the gains the firm had made since September last year. The firm is also suffering thanks to its close association with Saudi Arabia, which is the largest outside backer for its $100 billion vision fund. Saudi has invested almost $45 billion into this vision fund, and plans to make a similar contribution to SoftBank’s next fund.
Executives from top firms such as JPMorgan Chase & Co, have already exhibited their opposition to Kasnhoggi’s disappearance and Saudi’s potential involvement by pulling out of a major conference taking place in the country. Virgin group’s aerospace wing has also decided to say no to $1 billion that was supposed to be pumped into it by Saudi and its affiliates.
Speaking on the topic to Bloomberg, Amir Anvarzadeh, a senior strategist with Asymmetric Advisors in Singapore said:
We are not liking how Softbank has been trading and have decided to remove it from our recommended longs. Although we don’t expect this latest diplomatic incident to lead to any sanctions on Saudi, there is always some possibility that some firms will pull out their money from the Vision Fund.
We are starting to worry about other more likely scenarios that could prove as disruptive to Son’s plans. Firstly and most importantly, we believe tech names will remain under selling pressure leaving Vision Fund’s paper profits on names like Nvidia (NVDA) vulnerable to big under-performance relative to the fund’s targets.
Executives that have pulled out of Saudi Arabia’s Future Investment Initiative, include JPMorgan Chief Executive Officer Jamie Dimon, Uber’s Dara Khosrowshahi and Viacom Inc.’s Bob Bakish. Meanwhile, a group of countries that include the US, are mulling imposing sanctions over the middle-eastern kingdom over its role in the Washington Post writer’s disappearance.
