Saudi Arabia Turns Toward China

[Genghis khan1]

Switching oil trade to yuan should be the goal.

For that China needs to show Naval strength and provide security to GCC. Right now US 5th fleet is parked at Qatar, within the striking distance of every oil and gas well of GCC.

Switching petro reserve currency would be big blow to dollar strength and US economy and US will not let it happen.

 

[Mista]

$10 billion a year of course is not a small amount, no doubt. But look this way, Singapore SWF alone is roughly $1 trillion, which means a return of 1% can fully cover that without even touching domestic tax revenue. How much is the actual return? I guess 7% right? Current level of defence spend is affordable if not even comfortable for you guys, no worry!

没有人嫌钱多的 lol. I mean, despite our favorable fiscal position compared to many advanced economies, taxes and spending are still very contentious issues. We're not shaking legs and swimming in cash like what many foreigners looking at the figures would imagine. The government has already announced that they are planning to raise taxes because of our aging population.

The problem is that some populist politicians would advocate spending more from our national reserves, since they can promise to spend more without hiking taxes. That's why our constitution requires a separately elected President's consent to touch the reserves (LKY's idea before he stepped down as PM), otherwise a populist opposition can get into power in the future by promising the sky and spend the money.

National reserves

Article

eresources.nlb.gov.sg

 

[mike2000 is back]

Saudi Arabia's Wealth Fund Moves Closer to direct China stock deals
$450bn Public Investment Fund has applied for a qualified foreign institutional investor licence in China

Nov 5, 2021


Saudi Arabia’s sovereign wealth fund could start making major investments in Chinese companies, after so far limiting its overseas holdings to mostly the US and Europe.

The $450 billion Public Investment Fund has applied for a qualified foreign institutional investor licence in China, according to information published on the website of the country’s top securities regulator. That will give it the ability to directly trade renminbi-denominated stocks, rather than having to go through third parties.

A tilt towards China would make sense for the kingdom as it looks to develop economic ties through investment by its sovereign fund. China is the kingdom’s biggest trading partner and a top customer for Saudi Aramco, which is chaired by PIF governor Yasir Al Rumayyan.

Many global investors are warming to China’s battered stocks amid bets that Beijing’s regulatory overhaul has potentially peaked. The world’s second-biggest economy has also been an appealing destination for sovereign investors, with Russia’s wealth fund converting billions of its dollar holdings into yuan as part of an effort to make the country less vulnerable to sanctions.
The PIF, which has not disclosed any investments in China, has ambitions to control $2 trillion of assets and become a global investment powerhouse.

But since unveiling a plan to transform itself from a domestically focused holding company five years ago, its publicly disclosed investments have been mostly in the US and Europe.
Its first major international deal was a $3.5bn investment in Uber Technologies in 2016. More recently it backed Lucid Motors before it went public through a deal with a special purpose acquisition company.

Last March, as global markets crashed during the onset of the coronavirus pandemic, the PIF got a $40bn transfer from the kingdom’s reserves to bet that stocks would recover quickly

https://www.thenationalnews.com/bus...und-moves-closer-to-direct-china-stock-deals/


This is a Big News indeed

Saudi Arabia is a US puppet state. They have no say in their foreign policy .

 

[Ahmet Pasha]

Saudis will be Iron Brother next

 

[Song Hong]

Big problem for financial center like Singapore is hot monies create runaway inflation local asset especially properties. Once hot monies conspire to pull out at the same time, it cash out n x times versus what they pour in earlier.

The hot monies recipients face imminent bankruptcy and currencies fall a tailspin. Local companies run into liquidity problems. Then western sharks will jump in to feast and buy all good class asset at fire sales price.

This is how US wreak havoc in Asia during 1998.

Saudi and China sovereign wealth fund is mostly their own monies. They have no problem. There is reason to believe a lot of monies park in Singapore could be time bomb.

I am not very confident if GoS envisage such scenarios.

 

[vi-va]

There are 4 groups of creditors that have strong influence in the global financial landscape: China (including HK), KSA/GCC, Japan, Germany/Netherlands/Norway. While Germany being "Boss of Europe" is vested on dictating debts within Euro zone, it's left to the other three to support the current Dollar regime.

Yes, KSA is one pillar of petrodollar scheme, but it's hard to imagine KSA-US relationship turning sour in near-term in favor of China, you know the House of Saud is still under CIA "protection", US troops are also stationed there. I wish RMB can become a settlement currency in the "mid-term", but there are still tough challenges to overcome.

I mean midterm goal. I didn't mean KSA will ditch USD, that's suicidal of KSA. US will do everything they can to retaliate.
KSA can just accept RMB for China oil/gas trade. Rest of buyers will still have to use USD.

This arrangement reflect real influence of both China and US. It will hurt US interest for sure, but not as big as ditching USD.

1. China only buy 1.75 million barrels of oil per day from KSA, account for 17% of China oil import.
2. While KSA export 12 millions barrels of oil per day, china account for 16% of KSA export.

Yes, a measure of your NET assets, how rich you are. That's why I also mentioned HKSAR has the highest net external assets (aka NIIP) to GDP ratio in post #19, a whooping 586%! Is crazy! No wonder HKSAR dominates 60% of China Mainland's inbound FDI.

In absolute size of course Japan & Germany are the top financial powerhouses, well I think China may likely overtake them in a few years. But taking tiny population size into account, the "wealthy" powerhouses are HKSAR, Singapore, Taiwan, Norway, Switzerland, Netherlands.

Wealthy 0.01% of HKers only.

Saudi Arabia is a US puppet state. They have no say in their foreign policy .

Not exactly. I would call it interdependent. KSA may be dependent on US for 90%, versus US be dependent on KSA for 10%.

KSA definitely has their own interest, they said no to US for many times in history.
A recent case is KSA said no to US, and keep the oil price high for KSA own interest.

没有人嫌钱多的 lol. I mean, despite our favorable fiscal position compared to many advanced economies, taxes and spending are still very contentious issues. We're not shaking legs and swimming in cash like what many foreigners looking at the figures would imagine. The government has already announced that they are planning to raise taxes because of our aging population.

The problem is that some populist politicians would advocate spending more from our national reserves, since they can promise to spend more without hiking taxes. That's why our constitution requires a separately elected President's consent to touch the reserves (LKY's idea before he stepped down as PM), otherwise a populist opposition can get into power in the future by promising the sky and spend the money.

National reserves

Article

eresources.nlb.gov.sg

Singapore's opposition party is just a scum.

 

[vi-va]

The US considers the House of Saud as some glorified Chowkidars of the Arabian peninsula. The day the Saudis start showing their teeth or develop an objective independent policy their days will countdown. The biggest threat to the Saudis is the weakness of their governance structure and location of personal wealth of the power brokers. The US' favorite will quickly find themselves at the top and rest pushed aside. The US does that through a solid intel network within SA and all around it in Kuwait, Bahrain, Qatar, UAE and even Oman.

SA is firmly in the US camp and is going nowhere. If the US takes a hard line against the Saudis it will be primarily to replace him (MBS) with someone else. Infact I'll argue that is likely where we are to see the clash. The US rather have someone else at the top, MBS for them is too unpredictable. And with the blood of Jamal Kashoggi on his hands MBS is sort of radio-active.

Situation is in flux in SA and will remain like that. Does not mean US is willing or likely loosing control and influence over SA. SA is a prison in all the sense of the imagination. The ultimate prison guards being the US.

To your points above:
Point 1. - US does not buy Saudi Oil because US itself is no a Net exporter of energy due to its efforts around Shale and Fracking. Also US has always been and for years now a very small importer of ME oil.
Point 2. - US, Iran policy if anything is a lever for the US not SA. SA is the tail of the dog, and it is not the tail here wagging the dog. SA has no option but to follow US policy. It can groan and moan but does not have an oversized influence. Even Israelis sometimes find themselves thinking they have an oversized influence. US will carefully calibrate its Iran policy so as not to upend stability, but it will at the end of the day do what it wants, and SA might get pissed off but getting pissed off means nothing for a nation with little to no leverage.
Point 3. - US is committed to SA security. It is not committed to SA rulers agenda. US clearly sees the difference. For the US a ruler is a temporary man incharge. The nation is a permanent fixture. US has a massive security infrastructure in SA and it remains unmoved or challenged.
Point 4. - SA is a defacto colony of the US. So not sure what interferring with SA internal affairs means.

You made the point, thanks.

But even Japan, another colony of US, find her way out of US absolute control. Small nation sometimes can dance on the eggshell if they play smart enough.

In unipolar world, KSA is prey of US. US enjoy their dominance for about a quarter of century, from 1990s -2010s. After 2008 financial crisis, US dominance is fading out quickly.

US has NOT taken care of her domestic issues well, especially national debt issue and Covid-19. Literally, unipolar world has come to its end.

In a bipolar world or multipolar world, US can't do whatever he wants.

I agree with your point that US has enough military and CIA intelligence to do anything on KSA land, but it will backfire US global interest badly.

US has not made their mind to end her Global Empire, they have to take care a lot of things across the global.

If US mishandles KSA royal family, they may not be able to find another proxy to rule Saudi Peninsula.

So far, KSA royal family still share a lot of mutual interest with US empire. They are the goose laying golden eggs.

KSA royal family has close relationship with China(even Russia). They are smart enough to know China is US balancer naturally. A close relationship with China can be a lifesaver just in case.

I would assume China will trade with KSA in RMB in midterm, not short term, not long term.

 

[OIO]

You made the point, thanks.

But even Japan, another colony of US, find her way out of US absolute control. Small nation sometimes can dance on the eggshell if they play smart enough.

In unipolar world, KSA is prey of US. US enjoy their dominance for about a quarter of century, from 1990s -2010s. After 2008 financial crisis, US dominance is fading out quickly.

US has NOT taken care of her domestic issues well, especially national debt issue and Covid-19. Literally, unipolar world has come to its end.

In a bipolar world or multipolar world, US can't do whatever he wants.

I agree with your point that US has enough military and CIA intelligence to do anything on KSA land, but it will backfire US global interest badly.

US has not made their mind to end her Global Empire, they have to take care a lot of things across the global.

If US mishandles KSA royal family, they may not be able to find another proxy to rule Saudi Peninsula.

So far, KSA royal family still share a lot of mutual interest with US empire. They are the goose laying golden eggs.

KSA royal family has close relationship with China(even Russia). They are smart enough to know China is US balancer naturally. A close relationship with China can be a lifesaver just in case.

I would assume China will trade with KSA in RMB in midterm, not short term, not long term.

In the current situation, if the U.S. emperor cannot let China pay the bill, it can only let his allies pay the bill.

 

[Song Hong]

One big advantage of having Al Saud family there is this reactionary family will drag Arab feet on modernization and unification -- a goals always sought by white man and having made numerous attempts.

Just an example, the unification of KSA and Egypt under a progressive and patriotic ruling class is an absolute nightmare for white man.

 

[Shotgunner51]

hot monies

That's a huge misunderstanding bro! "Hot monies" exist everywhere especially in and between international financial centers where capital flow is free. They usually go in and out of securities markets which have high trade volumes, entrance/exit are fast, technically they are booked as Portfolio Investment which is very different from Direct Investment, Inter-company Loans, etc. If say a foreign entity send money into Hong Kong or London securities markets (stocks, bonds, etc) they are booked as one category of External Liabilities of Hong Kong, or UK, not assets!

In Singapore's case, foreign Portfolio Investment is quite low compared to foreign Direct Investment. i.e. "hot monies" don't like Singapore at all. In fact "hot monies" like to gamble in more volatile markets like NewLonKong (Hong Kong, London and New York) or markets where sovereign currency is volatile.

Saudi and China sovereign wealth fund is mostly their own monies

All sovereign wealth funds are the nations' very own assets, aka own monies, no exception bro.

 

[Song Hong]

That's a huge misunderstanding bro! "Hot monies" exist everywhere especially in and between international financial centers where capital flow is free. They usually go in and out of securities markets which have high trade volumes, entrance/exit are fast, technically they are booked as Portfolio Investment which is very different from Direct Investment, Inter-company Loans, etc. If say a foreign entity send money into Hong Kong or London securities markets (stocks, bonds, etc) they are booked as one category of External Liabilities of Hong Kong, or UK, not assets!

In Singapore's case, foreign Portfolio Investment is quite low compared to foreign Direct Investment. i.e. "hot monies" don't like Singapore at all. In fact "hot monies" like to gamble in more volatile markets like NewLonKong (Hong Kong, London and New York) or markets where sovereign currency is volatile.

View attachment 793863



All sovereign wealth funds are the nations' very own assets, aka own monies, no exception bro.

The GIC issue bonds which was bought by MAS, the national central banks. Need insider information and expert to figure out exactly how much was transferred from central banks to GIC. For example, even GoS perpetually denied GIC are funded by CPF (one of the GIC seed monies). GoS is not technically lying but they are lying de facto. Fund was transferred from MAS CPF by subscription of GIC bonds.

So long you have a financial center, monies can pull out real fast. HKMA and financial institution are deemed as sound or even more solid than Singapore in 1997. All monies are "cold" until the point some powerful forces decide to act, then suddenly things become hot. HK is peaceful so as Thailand, Korea. No one can predict Thai and Korean currency will crash fast. They all sound healthy.

And even currency board HKMA nearly collapse during 1998 until China bail it out.

When monies pull out, MAS got to answer, and ultimately MAS will ask GIC force sell asset if her reserve cant make it.

 

[Shotgunner51]

The GIC issue bonds which was bought by MAS, the national central banks. Need insider information and expert to figure out exactly how much was transferred from central banks to GIC.

Of course MAS will transfer external assets to under GIC management, it's the very purpose of setting up SWF.

There was no bailout cos it's not even needed in the first place. Soros was crushed to the ground by HKMA in the end, with Beijing's financial backup and more importantly a strong political stance on RMB exchange rate.

Legendary Forex Battles- How Soros Was Defeated By The Bank Of Hong Kong?

George Soros has played the best role in the financial market and reforming society. He is a fiscal predator who has been getting inspired by progressive

blog.scopemarkets.com

How Hong Kong survived the 1998 financial crisis

Backed by Beijing, the Hong Kong Monetary Authority made the controversial decision on August 14, 1998, to defend its financial market against international speculators.

news.cgtn.com

 

[Song Hong]

Of course MAS will transfer external assets to under GIC management, it's the very purpose of setting up SWF.

There was no bailout cos it's not even needed in the first place. Soros was defeated by HKMA in the end, with Beijing's financial and political backup.

How Hong Kong survived the 1998 financial crisis

Backed by Beijing, the Hong Kong Monetary Authority made the controversial decision on August 14, 1998, to defend its financial market against international speculators.

news.cgtn.com

Ultimately SGD is being backed by GIC asset. MAS is now holding fractional reserve.

Hope everything is good for Singapore forever.

 

[Shotgunner51]

Ultimately SGD is being backed by GIC asset. MAS is now holding fractional reserve.

Hope everything is good for Singapore forever.

No worry, GIC/Temasek guys have among the best combat mindsets/skills I've seen in the business, no weaker than even the battle-proven HKMA.

 

[Song Hong]

No worry, GIC/Temasek guys have among the best combat mindsets/skills I've seen in the business, no weaker than even the battle-proven HKMA.

You in this fund management business?