JEDDAH, 23 August — According to a number of Saudi investment bankers, there are no signs that Saudis are repatriating money from the US. This follows a report from Wednesday’s Financial Times that stated that Saudi investors have withdrawn $200 billion from the US.
On Monday, Arab News reported businessman Abdul Rahman Al-Zamil, chairman of Al-Zamil Group, as urging Saudi investors to repatriate their US funds to the Kingdom. So far that has not happened and Europe seems to be the popular option among Saudi investors.
Ezzat Pharaon, an investment banker with the Saudi American Bank believes that the Financial Times article was not clear in its findings. “It claimed that the shift in investments was because of the lawsuits but it also claimed that it has been happening for a few months; that’s a contradictory statement.” He continued, “And there’s no logic in saying it’s because of the lawsuit, since assets can even be frozen in Switzerland.”
Some Saudi investment observers believe the shift was more an investment decision rather than a political one. “From time to time, there is an international diversification shift by global investors among whom Saudis are no exception.
“Interest rate differentials influence investors’ asset allocation decisions in the short run. Capital seeks higher yields and the current market situation in Europe is yielding better than the US. Regarding the lawsuit, laws in America protect the investors from such arbitrary claims, from small courts all the way to the Supreme Court. This isn’t the first or last lawsuit of this nature.”
Meanwhile, in a statement to the BBC, Prince Alwaleed ibn Talal denied yesterday reports that Saudi investors had withdrawn $200 billion from the United States to protest rising anti-Saudi sentiment. “I am holding on to all of them (my investments) and, in all honesty, increasing my stakes in certain companies in the US.”
According to a report from the Dow Jones Newswire, major US brokers manage most of the private Saudi investments in the US markets, although local banks also have US and European equity funds. Research has shown that investments in the US are divided 60 percent in equities, 30 percent in real estate and 10 percent in other investments.
An estimated $1.3 trillion of Middle East wealth was invested abroad last year, of which about $750 billion was Saudi private investments. Bankers estimate that of this, 60 percent, or $450 billion was invested in the US markets. European and Asian markets received 30 percent and 10 percent of the total respectively.
