Saudi Arabia ETF Sinks as Mnuchin Pulls Out of Riyadh Conference




 

(Bloomberg) -- The largest U.S.-listed exchange-traded fund tracking Saudi Arabian stocks sank Thursday as U.S. Treasury Secretary Steve Mnuchin said he was skipping an investor conference in Riyadh amid rising pressure to hold the kingdom's leadership accountable for the disappearance of a Saudi journalist.

The $219 million iShares MSCI Saudi Arabia ETF, ticker KSA, started tumbling at around 10:30 a.m. in New York, eventually falling as much as 2.2 percent. The fund was down 1.6 percent in afternoon trading. Volume in the ETF has soared as well, with roughly 1.8 million shares worth around $50 million moving this week, almost quadruple the average weekly turnover for the past year.

Investors are also pulling cash out, with KSA seeing nearly $13 million of outflows on Tuesday, the most since its inception in September 2015.

The kingdom is under heightened international pressure to explain the disappearance of dissident journalist Jamal Khashoggi, who was last seen in September entering the Saudi Arabian consulate in Istanbul. The Saudi leadership has been accused of ordering his murder, but top officials have denied involvement in the disappearance and said they are investigating the matter. Media in the U.S. reported this week that the kingdom is considering saying he died in a botched interrogation.

"This investigation regarding what happened at the Saudi consulate in Turkey is causing people to panic a bit about potential ramifications sanctions-wise on KSA," said Andy Wester, senior investment analyst at Proficio Capital Partners. "It's tough to invest in the market because of the governance and attitudes toward western investors."

The crisis has reverberated across the Saudi business community, as high profile figures such as JPMorgan Chase & Co.'s Jamie Dimon and BlackRock Inc.'s Larry Fink also have pulled out of the kingdom's Future Investment Initiative event next week.

And in a case of unfortunate timing, Franklin Templeton Investments, a long-time active asset manager, launched a passive ETF last week that tracks the performance of large- and mid-cap Saudi stocks. The Franklin FTSE Saudi Arabia ETF, which goes by the ticker FLSA, launched last Thursday, just days after news of Khashoggi's disappearance emerged. The fund was down 2.4 percent Thursday after gaining 2.2 percent on Wednesday.

--With assistance from Tom Lagerman (Bloomberg Global Data).

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Carolina Wilson in New York City at cwilson166@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Eric J. Weiner, Andrew Dunn

For more articles like this, please visit us at bloomberg.com

©2018 Bloomberg L.P.

COMMENTS

More Related News

U.S. Travel Pain Grows as Winter Storm, TSA Sickouts Worsen
U.S. Travel Pain Grows as Winter Storm, TSA Sickouts Worsen

Winter storm Harper, a blizzard that the National Weather Service expects to travel from the Midwest through New England and the Northeast, may leave up to 18 inches of snow. In addition, severe thunderstorms with damaging winds and isolated tornadoes may plague the Deep South, along with heavy rain

U.S. Should Slow Syria Pullout to Contain Risks, Graham Says
U.S. Should Slow Syria Pullout to Contain Risks, Graham Says

"I believe it would be an absolute disaster to walk away from Syria and drop in Erdogan's lap armed elements of YPG that he considers to be terrorist and expect Turkey to deal with that and prevent ISIS from coming back," Graham, a South Carolina Republican, told Bloomberg in an interview in Ankara. Addressing concerns by Turkey, a NATO ally, over Kurdish militant group YPG can dovetail with American objectives such as containing Iran and the jihadist group Islamic State, he said.

Trump Says He
Trump Says He'll Make 'Major Announcement' Saturday on Shutdown

The person would not discuss what Trump plans to offer to the Democrats who now control the U.S. House, beyond saying that it may have something to do with immigration. White House Press Secretary Sarah Sanders declined to say what would be in the announcement, which Trump planned to make at 3 p.m. in Washington. A Trump tweet late Friday previewing a "major announcement" capped three days of dramatic twists in a clash between the president and House Speaker Nancy Pelosi that has become increasingly personal.

Pelosi Accuses Trump Administration of Leaking Her Travel Plans
Pelosi Accuses Trump Administration of Leaking Her Travel Plans

Pelosi said that after Trump on Thursday publicly revealed plans for the trip in a letter denying use of military aircraft for her congressional delegation to make the trip to visit troops in the war zone, they made alternative plans to use commercial service. "The fact that they would leak that we

Bye Bye Trade War? China Plans $1 Trillion Buying Spree to Reduce US Trade Deficit
Bye Bye Trade War? China Plans $1 Trillion Buying Spree to Reduce US Trade Deficit

China has extended the olive branch back to the United States by offering a path to eliminate Washington's burgeoning trade deficit with the country, Bloomberg reported Friday. The news comes less than a day after The Wall Street Journal reported that the Trump administration was considering lifting

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.