Khashoggi scandal: analysts accuse Saudi links of having dropped SoftBank

Journalist Jamal Khashoggi, missing – and allegedly murdered – is obviously bad news for the Saudis, who have already seen their trading partners press their plans. But this is also bad news for SoftBank (sftby), the Japanese conglomerate with close ties to Saudi Arabia.

SoftBank's share price fell by more than 7% on Monday, and analysts are blaming Khashoggi's outcry.

SoftBank is currently one of the most prolific investors in the world thanks to its "Vision Fund", a $ 100 billion treasure chest created two years ago by a $ 45 billion injection from the sovereign wealth fund. 'Saudi Arabia. Vision Fund investments include Uber and Didi Chuxing, GM's Cruise Group's auto subsidiary, ARM and Nvidia chip makers, and WeWork's office space company.

For Saudi Crown Prince Mohammed bin Salman, the Vision Fund's support was a means of diversifying the kingdom's oil economy. And it is a decision he intends to repeat: Earlier this month, it was reported that the Saudis were ready to invest an additional $ 45 billion in a second Vision fund, using cash from the introduction. on the stock exchange of Saudi Aramco, a public oil company, and the sale of a stake in Saudi-owned manufacturing giant SABIC (sabic).

However, since then, the Khashoggi case has exploded. The journalist, who had criticized Prince Mohammed, was last seen in the Saudi Arabian consulate in Istanbul on October 2nd. According to Turkey, he was later tortured, killed and dismembered. The Saudis deny it, but have provided no evidence to support their claim that he left the consulate alive.

With figures such as Richard Branson abandoning new trade deals and a host of sponsors and participants withdrawing from Prince Mohammed's conference on future investment, it seems likely that Khashoggi's disappearance and eventual death will have repercussions. . But what that will entail is unclear, especially if countries change their relations with Saudi Arabia.

Analysts said Monday that the decline in SoftBank's share price appeared to be due to the Khashoggi incident and a general decline in technology stocks.

Morningstar analyst Dan Baker told CNBC that SoftBank's other big gamble, Alibaba (baba), was doing well. So it was probably the "Saudi ties" that weighed on the share price of the Japanese conglomerate.

"We are currently witnessing violent reactions among technology companies and investors receiving funding from the Saudi government," said Ray Wang of Constellation Research at CNBC. Makoto Kikuchi, CEO of Myojo Asset Management, told Reuters that the sale was "more psychological than anything related to the concerns of [SoftBank’s] fundamentals. "

Although US President Donald Trump wants to maintain arms sales to Saudi Arabia, which is at war with rebels in Yemen, he warned that the kingdom would face a "severe punishment" s & # 39; it was proved that he was at the origin of the disappearance of Khashoggi. Saudi media warned that sanctions would create "an economic disaster that would upset the whole world".