Saudi Arabia Appears To Be Trying To Tank Canadian Asset Prices

Days after it broke off diplomatic relations with Canada, the Saudi government is now selling off the kingdom’s Canadian holdings, according to a news report, and it’s doing it in a way that’s likely designed to push down the market value of Canadian assets.

The Financial Times reported Wednesday that Saudi officials have ordered the country’s asset managers to sell off their Canadian assets “no matter the cost” — a clear sign the kingdom is willing to accept losses on the sales.

Saudi holdings in Canada are relatively small, but not insignificant. According to Bloomberg, Saudi Arabia has invested about $6 billion into Canada since 2006.

Among the largest investments is G3 Global Holdings, which is partly owned by the Saudi Agricultural and Livestock Investment Company. It is the successor company to the Canadian Wheat Board, which the previous federal Conservative government had privatized.

The Saudi sell-off of Canadian assets began on Tuesday, the Financial Times reported — the same day that market watchers reported a sell-off of Canadian assets from an unknown international dealer.

“From about 10:30 this morning a big sell program came in internationally at one of the dealers,” said Dominique Barker, a portfolio manager at CIBC Asset Management.

“We don’t know which one, but the market has sold off, and the Canadian dollar also sold off from about that time. So that’s impacting the Canadian market versus the rest of the world.”

But if this was an attempt by Saudi Arabia to push down Canadian markets, the move had limited success.

Canada’s main stock index closed lower Tuesday, with the Toronto Stock Exchange’s S&P/TSX composite index closing down 133.94 points at 16,286.30 in a broad-based decline.

Canadian stocks eked out a gain on Wednesday, with the S&P TSX closing up 28.78 points at 16,315.08 as sectors other than energy, consumer discretionary, and utilities climbed. The loonie dropped a mild 0.17 cents U.S., and was trading around 76.62 cents U.S.

Ottawa stands its ground

The Saudi government announced Sunday it is withdrawing its ambassador to Canada and freezing all new trade and investment. The move was in response to tweets from Global Affairs Canada and Foreign Affairs Minister Chrystia Freeland criticizing Saudi Arabia’s arrest of women’s rights activists, including Samar Badawi, a Canadian citizen whose brother — blogger Raif Badawi — was already imprisoned in the kingdom.

Since then, the Saudi kingdom has pursued a scorched-earth policy towards anything related to Canada. The country’s state airline announced it is suspending operations to Canada, and the Saudi government is withdrawing more than 15,000 students from Canadian schools. That will remove an estimated $2 billion in investment from Canada.The country is also pulling out Saudi citizens who are in medical care in Canada.

The federal Liberal government has stood its ground amid the Saudi moves.

“We are always going to speak up for human rights, we are always going to speak up for women’s rights and that is not going to change,” Freeland said Monday.

— With a file from The Canadian Press