Saudi Arabia has withdrawn tens of billions of dollars from global asset managers in order to cut its growing deficit and reduce its exposure to the fluctuations in the stock market amid the fall in oil prices, the Financial Times reported.
The newspaper also reported that the Saudi Arabian Monetary Agency’s foreign reserves have fallen by about $73 billion since the drop in oil prices last year. The Kingdom continues to spend money on sustaining the economy and fund its military campaign in Yemen against the Houthis and pro-Ali Abdullah Saleh forces.
Nigel Sillitoe, chief executive of financial services market intelligence company Insight Discovery, said that fund managers estimate that the Saudi Arabian Monetary Agency (SAMA) withdrew $50-$70 billion over the past six months.
He added: “The big question is when will they come back, because managers have been really quite reliant on SAMA for business in recent years.”
Many asset managers were surprised by the wave of withdrawals that have come consecutively since the beginning of the year, informed sources told the newspaper.
The Central Bank has also turned to local banks to reinvest into less risky, more liquid products, to make up for the rapid decline in reserves.
However, another fund manager said: “We are not that surprised, SAMA has been on high risk for a while and we were prepared for this.”