By Marwa Rashad
RIYADH, June 16 (Reuters) – Saudi Arabia’s stock market is
expected to see little impact from the death of the kingdom’s
crown prince on Saturday, despite an intraday drop, as investors
bank on a smooth succession, analysts said.
The Saudi index declined 2.5 percent during the
session as rumours of Crown Prince Nayef bin Abdulaziz al-Saud’s
death circulated on social media earlier in the session. The
market recovered some ground to end 0.3 percent lower at 6,724.5
points, a 10-day low.
Analysts said the official confirmation of the news on state
television helped allay potential market uncertainty.
“(The decline) is normal within an emerging market where
people are impacted by rumours,” said Turki Fadaak, head of
research at Al Bilad Investment.
Abdulhamid Al Amri, a member of the Saudi Economic
Association, said the quick announcement “reflected the solidity
of internal stability in the kingdom.”
International factors – a Greek election that could sow
further eurozone uncertainty and the outcome of Egyptian
elections – had dominated sentiment in Gulf Arab markets in
recent trading sessions as wary investors cut positions. That
tone is unlikely to be overtaken by Nayef’s death in Geneva.
The crown prince, believed to be 78, was next in line to the
Saudi throne after being appointed just eight months ago.
“I don’t think he had enough time to leave his stamp. It
won’t have a substantive impact in the short term,” said
Mohammed Ali Yassin, former chief investment office at CAPM
Investments in Abu Dhabi. “The only issue is of succession and
if that happens within the next few days – which is expected –
there should be little impact on the markets longer term.
“The issues are more political than economic.”
The king and a family council are expected to start work on
the appointment of a new crown prince with Defence Minister
Prince Salman bin Abdulaziz widely seen as the next most senior
prince in the world’s top oil exporter.
Economically, the kingdom expanded at an officially
estimated 6.8 percent in 2011, supported by high oil prices and
lavish government spending.
The Saudi stock market, the largest in the Arab world, has
been on a downtrend since hitting 2012 highs in early April. The
TASI all-share index had gained 23.6 percent to April 3, buoyed
partly by hopes the market will be opened to limited direct
foreign ownership. That process is not seen completed this year.
An unusual message from King Abdullah, reported by a local
daily in early April, ordering a crackdown against market
manipulation, including any done by royal family members, has
triggered rumours of imminent action by the Saudi regulator
though no major public move has yet occurred.
The index will resume trading as scheduled on Sunday. The
kingdom does not close to mark official mourning periods.
(Additional reporting, writing by Amran Abocar; Editing by
Sami Aboudi)
