Amid Cash Crunch, Qatar Sovereign Wealth Fund May Start Liquidating Stock Holdings

Tyler Durden's picture

Since we first highlighted the cash-crunch in Qatar over a week ago, the situation has got notably worse (as liquidity costs rise further, signalling Qatar's financial system is running out of dollars).

The good news for Qatar - the world's wealthiest nation on a GDP/capita basis - is that it has enough financial firepower to withstand a prolonged financial siege, and defend its currency and economy, Finance Minister Ali Shareef Al Emadi told CNBC in an interview broadcast last Monday.

However, we warned then that "while so far there has been no suggestion that Qatar would commence liquidating its reserves, investors have already begun selling Qatari assets and speculating against the riyal, concerned how long Qatar can weather the crisis without having to devalue its currency or sell any of its global holdings."

And as Reuters now reports, that appears to be starting a, according to people familiar with the matter, Qatar's sovereign wealth fund has transferred over $30 billion worth of its domestic equity holdings to the finance ministry and may sell other assets as part of a restructuring drive.

Stakes in 18 companies were transferred earlier this year, before Qatar's diplomatic rift with other Gulf states. The stakes include major holdings in some of the country's top firms such as Qatar National Bank, telecommunications operator Ooredoo, and Qatar Electricity & Water Co.

"The assets were transferred so that the Ministry of Finance could oversee these holdings in a more active manner," one of the sources said.

 

He added, "Under the rule of Sheikh Tamim, Qatar is moving into an era of greater government scrutiny and oversight of funds. The finance ministry has a hands-on approach to public investments."

 

"It has not been decided yet how the revenue from the company dividends will be used. They could form an additional revenue stream for the government, or the finance ministry holdings could be prepared for privatizations or strategic sales," the first source said.

The holdings transferred to the finance ministry include stakes across the country's banking industry: Islamic lender Masraf al Rayan, Ahli Bank, Qatar Islamic Bank, Qatar International Islamic Bank, Doha Bank, Commercial Bank of Qatar and Al Khalij Commercial Bank.

They also include industrial, trading and transport firms: Qatar National Cement, Al Meera Consumer Goods, Qatar Gas Transport, Gulf International Services, Mannai Corp, Mayaza Qatar Real Estate, Qatar Industrial Manufacturing Co and Qatar Oman Investment Co.

And judging by the last 2 days of aggressive selling, investors are confidently front-running the liquidation of some or all of these domestic holdings...

This move, if it happens, is reminiscent of 2015's massive liquidations by global reserve managers which had two possible explanations, the first being that foreigners are unloading US paper (ostensibly to domestic accounts) ahead of what they perceive a trajectory of Fed rate hikes which could pressure prices lower; or more likely, the ongoing surge in the dollar and collapse in commodity prices continues to pressures foreign reserve managers to liquidate US Treasury holdings as they scramble to satisfy surging dollar demand domestically and unable to obtain this much needed USD-denominated funding, are selling what US assets they have.

Which of course, if it were to continue too long or too hard, could well force The Fed back on to the sidelines (especially as it expects to begin quantiative tightening of its balance sheet again as soon as September).

Notably that seems to be reflected in Riyal forwards which, after a brief respite, have spiked to record lows once again, front-running the capital flight...

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Jim Sampson's picture

HA!  Nice holdings!

BullyBearish's picture

he who panics first, panics best...

So Close's picture

In hind sight that may very well look a genius move.

Insurrexion's picture

Qatar's sell-off is a secondary result of various geopolitical fires being spread around the globe.

Our daily speculation on the next financial meltdown mechanics have been incorrectly focused on the CBs, while every day, the CBs are becoming irrelevant.

Despite the CB's fraudulent manipulations killing capital markets around the world, look at the events that are outside their control:

Qatar sells off equity and bond assets.

US equities are in the beginning of a contraction.

Brexit sets off bank failures in Italy, Spain and France.

Greece defaults. Illinois and Puerto Rico default.

US Retail is dying.

Oil prices are tanking (until a hot war sends them skyrocketing, tanking equities and the bond market)

At some point, this thing goes contagion.

It's the war machine that tanks the global economy.

Let's say the MIC gets their war with Russia?

N. Korea gets out of control and launched nukes?

Trump is assassinated by a left-wing news reporter?

Iran and Saudi Arabia go to war?

Then what?

Like Pontius Pilate, the CBs wash their hands.

Dame Ednas Possum's picture

Couldn't happen to a nicer bunch of Qataris.

Putrid_Scum's picture

Winter is coming.

montresor's picture

Banks, oil, and retail.. Great advice they're getting for a fee..

withglee's picture

 (as liquidity costs rise further, signalling Qatar's financial system is running out of dollars),

If they knew what money really is and they instituted their own "proper" MOE (Medium of Exchange) process, this wouldn't be happening. Money is "only" created by traders. Traders create it to record a promise to complete a trade over time and space. When they deliver on their promise, they return the money they created and it is destroyed. If they default, interest collections of like amount immediately recover the default and it is destroyed.

Using the USA "improper" MOE process (i.e. the dollar), they get the worst of both worlds. They get a flawed MOE process ... and allow foreign money changers to control it ... thus taking away traders freedom to trade.

How stupid can they be?

And why do they do it? They could institute a "proper" MOE process in less than six months ... making the dollar they have thus far chosen to use totally non-competitive and thus impotent.

Antifaschistische's picture

Rather than stacking up paper wealth, shouldn't the qatari's have bought themselves a few islands in the Maldives (or somewhere as close as possible) where they can actually grow food!   Qatar is NOT a place you want to be in any SHTF situation...no water, nothing green in the entire country from a satelite image...you're just screwed.  Raising cash just buys you time...it's not a survival plan. 

Albertarocks's picture

When I was a kid in small town Canada, damned near every house had an amazing big garden.  These days there are fewer but some people still do it.  Not so much in the big cities though.  I hear that in some states (or counties?) growing your own garden will net you some jail time.  How diabolical is that?  In any case, thank god we in the western hemisphere at least know how to produce grains, veggies, fruits and meats in abundance.  Not sure how all that good stuff is going to get to the stores in the cities though once the banks disappear.  Trucking will grind to a stop.

29.5 hours's picture

Here in Florida, it is possible to get into loads of trouble with county/municipal "authorities" setting up a vegetable garden in your front yard. Double ditto with setting up a drainage system so that rain from the roof can supply that garden. Bureaucracy will make your life complicated—when all you want to do is grow things.

Albertarocks's picture

Laws like that just boggle my mind.  It's all about control, conditioning rock solid sovereign Americans to accept that they are inferior to the state and therefore have to ask permission for everything except taking a shit.  I imagine that one is coming.

There are no such laws in Canada yet and none that are planned that I know of.  In any case, I don't think things are going to get much better in the US until we start coming out the other side of the dark years ahead.  But if this Kondratiev cycle is like all the others, in 10-15 years mankind will be in for something glorious.  That no doubt includes some amazing technoligical developments that we can barely even imagine today (such as completely new ways to use sound, including for healing and moving objects).  Plus the bonus of a global spiritual awakening that should put an end to the type of tyranny the world is currently under.  I think the bankers are in for some seriously painful karma.

directaction's picture

The oil under the sands and waters of Qatar is depleting and finite.

The paper wealth they've traded the oil for is vaporizing and impermanent.

The wealth of Qatar is a myth, a mirage, a bubble about to pop.

Hate to be there when it all falls apart, and it wiil, sooner than most think.  

29.5 hours's picture

Selling 22% of Sainsbury and 17% of Volkswagon would bring on an avalanche in a hurry. No wonder the U.S. government (Wall St. / Fed) is acting openly to quiet down the big actors in the Mideast.

 

PontifexMaximus's picture

offer the 22% of sainsbury and the 17% to the chinese, they take it in 10 seconds.

illuminatus's picture

Don't worry folks, the PPT has plenty of digibucks to buy anything Qatar has to sell, come to think of it so does the Swiss central bank..

Dragon HAwk's picture

easiest way to win a war is to bankrupt your enemy

Bunga Bunga's picture

Don't worry, central banks will take the appropriate measures.

dogismycopilot's picture

What many don't know about Qatar is that there are other tribes in Qatar who hate the Al Thanis.

Especially the Bedouins by the KSA border.

GRDguy's picture

Restructuring is such a big word for "take the money and run."