Tech

Worries about Saudi Arabia are thumping shares of one of Japan's biggest tech companies

Key Points
  • Japanese tech giant SoftBank saw its stock drop more than 7.2 percent in by the close in Tokyo on Monday, amid concerns about its ties with Saudi Arabia's government.
  • Saudi Arabia has come under increased scrutiny recently over the disappearance of Jamal Khasshogi, a journalist and critic of the government.
  • Khasshogi's disappearance has prompted a series of high-profile boycotts from an upcoming event to be held in the country which has been dubbed "Davos in the Desert."
Masayoshi Son speaks during a joint announcement with Toyota Motor to make new venture to develop mobility services in Tokyo in October 2018.
Alessandro Di Ciommo | NurPhoto | Getty Images

Global concerns about a missing Saudi journalist are dragging down one of Japan's largest tech giants.

Conglomerate SoftBank saw its stock fall by 7.27 percent on Monday by the end of the trading day in Tokyo. The company, which has reshaped the global technology landscape with investments in companies such as co-working space operator WeWork, Indian e-commerce heavyweight Flipkart, and ride-hailing giants Uber, Didi Chuxing, Grab and Ola, has close ties to the Saudi Arabia government.

In fact, a significant amount of SoftBank's investment capital comes from the country, which is now under withering global scrutiny amid concerns about the disappearance and suspected killing of journalist Jamal Khashoggi.

Analysts attributed the Monday stock move to the questions swirling about how other countries and investors will respond to the kingdom.

"We are seeing a massive backlash right now on Tech companies and investors who are receiving funding from the Saudi Arabian government," Ray Wang, principal analyst and founder at Constellation Research, told CNBC in an email.

What is Softbank?
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What is Softbank?

"We see this as the primary pull back on SoftBank but also the overall pull out of Tech," he said.

That sentiment was echoed by Dan Baker, an analyst at Morningstar, who noted that SoftBank's big stake in Chinese e-commerce giant Alibaba doesn't appear related to Monday's move.

"The other biggest impact on SoftBank's valuation (indeed accounting for roughly half of its valuation) is its stake in Alibaba, and that was up in trading on Friday night. So I assume it is mainly the Saudi ties," Baker said.

The movement in SoftBank's stock comes amid a series of prominent boycotts of a high-profile investment conference due to happen later this month in Saudi Arabia.

Wang said the Future Investment Initiative, which has also been dubbed "Davos in the Desert," will be "highly scrutinized."

"The boycotts behind those who are attending will be tremendous," he said.

Some of the recent figures who have said they won't attend the event include J.P. Morgan Chase CEO Jamie Dimon and Ford Motor Chairman Bill Ford. Several executives and media outlets — including CNBC, Financial Times, CNN and The New York Times — have also withdrawn from the event.

Khashoggi was a critic of Saudi Crown Prince and the royal family, and has been missing since he was last seen entering the Saudi consulate in Istanbul on Oct. 2.

Saudi Arabia has denied it was involved in Khashoggi's disappearance. Turkey has reportedly informed the U.S. that it has video and audio evidence showing Khashoggi, who wrote for The Washington Post, was killed inside the consulate.

Khashoggi had been living in the United States as a voluntary exile from Saudi Arabia.

—CNBC's Mike Calia and Yen Nee Lee contributed to this report.