Lenovo announces partnership with Saudi unit, stock falls up to 6% post news.

Lenovo Group has signed an agreement with a unit of Saudi Arabia's sovereign wealth fund to issue bonds worth $2 billion and establish a greater presence in the Middle East, despite the Hong Kong stocks of this PC manufacturer still significantly falling from a nine-year high.

Lenovo stated that it has reached an agreement with Alat, a unit under the Saudi Arabian Public Investment Fund, to issue $2 billion in zero-coupon convertible bonds to this unit. These bonds are interest-free and will be repaid within three years.

The two companies have also reached a "strategic cooperation" agreement under which Lenovo will set up a headquarters in the Middle East and establish a manufacturing plant in Saudi Arabia with the support of Alat.

Following this transaction, Lenovo's stock price fell by up to 6%, then recovered some losses in the 22:38 ET (02:38 GMT) trading, ending at HK$11.52 per share, down by 2.5%.

The stock is a significant component of the Hang Seng Index, which fell by 1.3% amidst a general decline in technology stocks.

After surging to nearly a nine-year high earlier this week, Lenovo's stock experienced some profit-taking. The company showed strong performance in the first quarter of 2024, recovering from a decline in device sales and revenue brought on by COVID.

Recently, the company launched two new personal computers configured to run artificial intelligence directly – a way for the device manufacturer to tap into the growth trends of the new industry.