Saudi Arabia’s central bank has instructed its fund managers to sell off their Canadian holdings, three people familiar with the matter said.
The latest move is a widening diplomatic row that has also hit trade between the two countries as well as Saudi students studying abroad.
The Saudi decision to liquidate Canadian financial assets is poised to affect hundreds of millions of Canadian dollars’ worth of equities, bonds and cash.
The relatively small selloff isn’t expected to carry a major financial impact for Canada, but it marks a sharp escalation of a spat that erupted from a Canadian government tweet.
The move “sends a very bad signal to foreign investors,” said a Gulf-based banker with knowledge of the matter. “Who will want to invest in a country where such decisions can be taken?”
Saudi Arabia and Canada have been at loggerheads since Canada’s foreign ministry criticized Saudi Arabia’s recent arrest of human-rights activists.
Canada’s foreign ministry, in a Twitter message sent Friday, called on Saudi authorities to “immediately release” the activists.
The Saudi government rejected what it described as Canada’s unacceptable interference in its domestic affairs, and on Monday expelled the Canadian ambassador to the kingdom and recalled its own from Ottawa.