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...