SoftBank tipped for $25bn KSA investment in ‘unique’ deal

SoftBank plans to deploy up to $15 billion in the new high-tech city of NEOM. (Reuters)
Updated 16 November 2017
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SoftBank tipped for $25bn KSA investment in ‘unique’ deal

LONDON: SoftBank’s reported plan to invest $25 billion in Saudi Arabia would be a “unique” move, a Riyadh-based economist has said.
The Japanese group, which is headed by Masayoshi Son, plans to invest the funds in Saudi Arabia over the next three to four years, Bloomberg reported on Wednesday, citing people familiar with the matter.
SoftBank plans to deploy up to $15 billion in the new high-tech city of Neom, with its $100 billion Vision Fund planning an investment of as much as $10 billion in Saudi Electricity, Bloomberg reported.
John Sfakianakis, director of economic research at the Gulf Research Center in Riyadh, said the reported investment would be “unique” as KSA is a co-investor in the Vision Fund.
“Here we have some of the money that Saudi Arabia invested in Vision finding its way back to the donor country, helping the Kingdom to invest in key evolving technologies, and boosting the economy overall,” said Sfakianakis.
The move would be part and parcel of what SoftBank indicated at last month’s Future Investment Initiative in Riyadh, added Sfakianakis.
SoftBank representatives made it clear then that they wanted to reinvest money from the Vision Fund into KSA, as the country looks to diversify its economy and reduce its dependence on oil, he said.
At the same time, the Vision Fund’s investment philosophy underlines Son’s belief in a future that he believes will be dominated by robotics and artificial intelligence.
Its investments so far have spanned robotics software start-ups like Brain Corp. and business software maker Slack. SoftBank has also been involved in a plan to buy a fifth of the existing stock of Uber — the company that has disrupted the transportation industry. With plans for Neom to be at the forefront of robotics and AI, the planned $500 billion megacity is an an obvious target for Son and SoftBank, said Sfakianakis.
Besides SoftBank and the Saudi wealth fund, investors in the Vision Fund include the sovereign wealth fund of Abu Dhabi, Apple and Foxconn. The Vision Fund announced in May it had raised over $93 billion from investors to fund ventures in areas such as AI and robotics.
Saudi Arabia previously announced plans to sell a large minority stake in Saudi Electricity to the Vision Fund but the figures have not been made public.
SoftBank did not respond to a request for comment on the Bloomberg report. Representatives of Saudi Arabia’s Public Investment Fund (PIF), the investor in the Vision Fund, did not provide a comment.


Some US manufacturers feeling China trade war pinch

Updated 13 min 37 sec ago
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Some US manufacturers feeling China trade war pinch

WASHINGTON: Some US manufacturers are delaying investments and raising prices as President Donald Trump escalates trade wars with key US economic partners but most companies report no change, according to a survey released Monday.
The National Association for Business Economics also found in its monthly report that members unanimously expected economic growth to continue in the next year, with most forecasting inflation adjusted growth of more than two percent.
“Labor market conditions are tight with skilled labor shortages driving firms to raise pay, increase training and consider additional automation,” Sara Rutledge, chair of the quarterly survey, said in a statement.
Companies reported rising profits and higher sales expectations. But despite the scarcity of workers, a survey index of wage growth slowed after hitting a record in April.
The survey, which polled 98 economists at private companies and trade associations, also found signs of rising prices, a possible sign that inflation and Trump’s new import duties were filtering into the economy.
An index of prices charged hit a 12-year record, jumping 14 points, while a measure of materials costs hit a seven-year record, soaring 15 points.
Trump this week began the process to impose tariffs on up to $200 billion in additional imports from China, adding to the levies imposed on $34 billion in goods which took effect earlier this month.
Economists say this could boost inflation, which already is beginning to rise after a decade of economic recovery, albeit gradually.
Still, a majority in the NABE survey, 65 percent, said trade concerns were not causing their companies to change plans for investment, hiring or pricing.
Things were chillier in the goods producing sector, however, with only 37 percent reporting no change.
Among manufacturers, 26 percent said they were delaying planned investments and 16 percent reported having to raise prices.
And, as the same survey had found April, most respondents, or 65 percent, said they were not changing plans to hire or invest because of December’s sweeping corporate tax cuts.