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SoftBank's Saudi relations are alienating investors as equities fall 8 percent



TOKYO (Reuters) – SoftBank Group Corp. ( 9984.T ) saw its shares fall on Monday as the consequences of the disappearance of a Saudi journalist spread to the Japanese conglomerate, whose nearly $ 100 billion in vision Fund is funded almost half of Saudi Arabia.

FILE PHOTO: The SoftBank Group Corp logo will be showcased at SoftBank World 201

7 in Tokyo, Japan on July 20, 2017. REUTERS / Issei Kato

The SoftBank's VisionFund is the world's largest technology investment vehicle of a series of deals has sealed the group's Chief Executive Masayoshi Son with the Saudi government.

But the oil-rich kingdom was threatened by "US President Donald Trump" due to the disappearance of Jamal Khashoggi, a journalist from the Saudi authorities, this month. Turkey said Khashoggi was killed in the Saudi consulate in Istanbul, while Saudi Arabia said the journalist was unhurt.

Concern over the disappearance of the population has led to more and more participants leaving the investment conference "Davos in the Desert", which has become the biggest investor show for the reform vision of Saudi Crown Prince Mohammed bin Salman.

With SoftBank's Saudi shares jittering, the sell-off of the stock is "more psychological than anything else, related to fundamentals," said Makoto Kikuchi, CEO of Myojo Asset Management.

The stock of SoftBank fell in the early afternoon by almost 8 percent. With further investor concerns, including a Sino-US trade dispute and a possible slowdown in the Chinese economy, the Nikkei stock price index .N225 fell 1.7 percent. Meanwhile, oil prices rose as worries about the missing journalists raised concerns about the supply.

A SoftBank spokesman declined to confirm that SoftBank's executives will be attending the conference next week. Son, Vision Fund boss Rajeev Misra and Simon Segars, CEO of ARM Holdings, were listed as attendees on a conference website that is no longer available.

Dara Khosrowshahi, CEO of Uber Technologies Inc [UBER.UL] – in which SoftBank is the largest shareholder – said last week he would not attend anymore. Saudi Arabia also has its own investment in the ride-hailing company.

SAUDI TIES

Under Son, SoftBank built its global influence through technology investment and last year raised over $ 93 billion to create its Vision Fund – $ 45 billion from Saudi Arabia.

The tech commitment led SoftBank to become involved in a broader sell-out of technology stocks. The decline on Monday increased the two-week decline in SoftBank shares by nearly 20 percent.

Links to the Gulf Kingdom reach beyond tech investments. SoftBank and Saudi Arabia said in March that they would build the world's largest solar energy project.

The Kingdom has appointed Son as Advisor for its $ 500 million NEOM high-tech city, and last October it was said it was considering selling a large stake in Saudi Electricity Co to the Vision Fund.

Due to the increasing volume of announcements and the lack of details about the associated costs and implementation, analysts have difficulty calculating potential impact on SoftBank finances.

coverage by Sam Nussey; Additional coverage by Ayai Tomisawa and Yoshiyuki Osada; Edited by Edwina Gibbs and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

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