Saudi ties SoftBank with investors unfavorable, while shares fall by 8%

TOKYO (Reuters) – SoftBank Group Corp (9984.T) saw its shares drop on Monday due to the disappearance of a Saudi journalist who extends to the Japanese conglomerate whose Vision Fund, with nearly $ 100 billion, is funded by nearly half by the Saudi Arabia.

The SoftBank Vision Fund is the largest technology investment vehicle in the world and is one of many transactions between the group's chief executive, Masayoshi Son, and the Saudi government.

But the oil-rich kingdom has been threatened with "severe punishment" by US President Donald Trump for the disappearance this month of Jamal Khashoggi, a journalist critical of the Saudi authorities. Turkey said Khashoggi was killed at the Saudi Arabian consulate in Istanbul, while Saudi Arabia said the journalist escaped unharmed.

More and more participants withdrew from the "Davos in the Desert" investment conference, which became the largest investor fair to promote the reform vision of Saudi Crown Prince Mohammed bin Salman.

The sale of SoftBank shares in Saudi Arabia is worrying, the sale of shares is "more psychological than anything related to concerns about its fundamentals," said Makoto Kikuchi, managing director of Myojo Asset Management.

SoftBank's shares fell by nearly 8% in trading at the beginning of the afternoon. In light of other investor concerns, including a Sino-US trade dispute and the possible slowdown in the Chinese economy, the Nikkei share price benchmark, the N225, fell by 1.7%. At the same time, crude oil prices rose due to worries over the journalist's disappearance.

A spokesman for SoftBank declined to confirm whether SoftBank executives would attend next week's conference. His son, Rajeev Misra, head of Vision Fund, and Simon Segars, chief executive officer of ARM Holdings, were on the list of participants on a web page of the conference that was no longer available.

Dara Khosrowshahi, CEO of Uber Technologies Inc. [UBER.UL] – SoftBank is the largest shareholder – said last week that it would no longer participate. Saudi Arabia also has its own investment in the mobile phone business.

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Under Sound, SoftBank strengthened its global influence through technology investments and raised more than $ 93 billion last year to create its Vision Fund, of which $ 45 billion came from the United States. Saudi Arabia.

As a result of this technology exposure, SoftBank has been caught in a larger selloff of technology stocks, Monday's decline exacerbating a two-week drop in SoftBank shares of nearly 20%.

The links with the Gulf Kingdom go beyond technology investments. In March, SoftBank and Saudi Arabia announced the construction of the largest solar power project in the world.

The kingdom has appointed Son as an advisor to the NEOM high-tech city, which is estimated at $ 500 billion. Last October, he announced his intention to sell a significant stake in Saudi Electricity Co to Vision Fund.

Announcements to increasingly important issues – and the lack of detail on the associated costs and their implementation – have left analysts struggling to calculate the potential impact on SoftBank's finances.