Saudi Arabia Pumps Up Stock Market After Bad News, Including Khashoggi Murder

The government of Crown Prince Mohammed bin Salman has spent billions to counter selloffs in recent months

Saudi Arabia’s government has been spending billions of dollars to quietly prop up its stock market and counter selloffs that have followed repeated political crises in recent months.

According to a Wall Street Journal analysis of trading data and interviews with multiple people with direct knowledge of government intervention efforts, the Saudi government has placed huge buy orders, often in the closing minutes of negative trading days, to boost the market.

The Saudi stock market is a pillar of Crown Prince Mohammed bin Salman’s plan to revamp his country’s economy. Since he ascended to a top leadership position three years ago, the de facto Saudi ruler and his deputies have faced a series of foreign-relations predicaments—most recently the October murder of columnist Jamal Khashoggi—that prompted investors to dump Saudi stocks.

The Saudi stock exchange normally discloses how much stock the government buys. The recent purchases after political crises have been concealed from public view. That is because the government, rather than buying stock directly, has routed its money through asset managers at Saudi financial institutions who run funds that don’t need to reveal their clients, those people say.

.. It is a strategy the kingdom used last year after it launched an economic blockade of Qatar, following the arrest and torture of prominent Saudis, a corruption crackdown that some inside the government called a political purge, and after Prince Mohammed detained Lebanon’s prime minister, the Journal found.

Through the upheaval, Prince Mohammed’s government has been keen to show the world that Saudi Arabia remains safe for foreign investors. “We need to highlight to the world that Saudi investment is good,” said a Saudi government official.

.. China and other developing countries have been intervening for years in their stock markets. The Saudi efforts stand apart because they’re geared to attract foreign investors to a market with little foreign ownership. Foreigners only own about 4% of stock on the Saudi market, where all of the companies are Saudi-based and many have some government ownership.

.. Antoine van Agtmael, who coined the term “emerging market” almost 40 years ago, and who now works as an adviser for publisher FP Group, said government intervention makes the Saudi stock exchange “more of a fake market, and that kind of undermines the trust of investors in the long run.”

.. Having a healthy stock market is especially important because the Saudi stock exchange, known as the Tadawul, will be included next year in global emerging-market indexes. That inclusion will result in billions of dollars of foreign capital entering the exchange, which currently has a market capitalization of around $500 billion.

.. To prop up the market, the government has bought stocks via its sovereign Public Investment Fund, or PIF, say people familiar with the matter. PIF has been Prince Mohammed’s main investment instrument at home and abroad, taking a high-profile stake in Uber Technologies Inc. and investing billions of dollars with SoftBank Group Corp.

.. When local share prices falter, one of these people says, Mr. Rumayyan tells deputies to start buying. They use the messaging program WhatsApp to contact managers at institutions including state-controlled NCB Capital Co. who manage PIF funds, this person says.

George Washington’s Fugitive Slave: Ona

A little-known story of how one woman stood up to one of the most powerful men in American history. Her story comes to us from Uncivil, a history podcast from Gimlet where they go back to the time our divisions turned into a war, and bring you stories left out of the official history.

Nina Jacobson: Powerful men do not Wear Toupees

Today we talk to Alex Blumberg about his new podcast “Without Fail” and then, he shares with us his interview with movie producer Nina Jacobson. In it, Nina talks through her biggest failures and most surprising successes.

36 min: Powerful men do not wear toupees.  

I know something about you that you don’t want me to know and that is an indicator of self-doubt

 

37 min: Never do something that someone isn’t really passionate about

There is no chance that there won’t be some failure so there has to be some room to allow for failure.

What Facebook Knew and Tried to Hide

Even when the Facebook leaders understood the problem, they tried to hide it.

Right after the election Zuckerburg was dismissive of the idea that Fake News influenced the election.

People within the company thought he was out of touch.

At the time Facebook was under pressure.

Trump had won the election using social media, but Facebook was dismissive.

Facebook employees saw the tip of the iceberg .  They had been following Russian

Mark wanted to find a technical fix.

Sheryl was thinking about the legal risk and was wondering whether they would find out things they didn’t want to know.  Sheryl was thinking about what the consequences would be.

Sheryl yelled at the security team for investigating Russian interference without formal approval.

The leadership was concerned that Washington was controlled by conservatives who would have an adverse reaction to an investigation or efforts to curb this activity.  Conservatives already think Silicon Valley is a bunch of hippies.

There was pressure within Facebook not to publish anything linking activity back to Russia.  Sheryl(?) also signed off on a policy not to take down the Russian troll accounts.

Mark Zuckerburg was traveling the country, milking cows, and acting as though he wanted to run for President.

Sheryl Sandberg was running her own “Lean-In” brand.

Alex Stamos (Security Chief) briefs the audit committee and the board’s response is to yell at Mark(?) and Sheryl(?)

The leadership holds a big meeting and Sheryl yells at Alex Stamos for

  • not briefing her fully
  • admitting that they hadn’t fully got a grip on the situation
  • suggesting that Russia would likely do this again in the future

Alex has gotten in trouble in the past for being too transparent

The Cambridge Analytical Scandal illustrates:

  • The consequences of surveillance capitalism
  • The potential of Facebook to influence elections

Apple CEO Tim Cook castigates Facebook for their business model.

Facebook conducts an advertising campaign and privately goes on attack using the Washington PR opposition research campaign, which uses the NTK network which publishes propaganda.

Confronted with a Propaganda Scandal, they turn to a PR campaign to create their own Propaganda.

Attacks Apple and Tim Cook.  Attack George Soros, arguing the Facebook’s criticism was masterminded by George Soros.  In taking on Soros they are getting into the smear and conspiracy business.

 

Related:

Damage Control at Facebook: 6 Takeaways From The Times’s Investigation