Flight of Saudi
funds from US raises concern
By James Politi in
Published:
Moves by Saudi investors to shift tens of billions of dollars out
of the
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
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
But Mr Brown said the question was "whether any Saudi
disinvestment is isolated, or part of a global move to reduce
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
Mr al-Medlej said there was a perception
that since the September 11 terrorist attacks, the
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
Find this article at:
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------