EDDAH — The Saudi stock market rose more than 1 percent on Thursday, heading for their biggest weekly gain in six years, after the promotion of Prince Muhammad Bin Salman to the role of crown prince and the prospect of inclusion in MSCI’s equity index.
The outperformance came even though crude prices resumed their slide. With Brent futures now down more than 10 percent in June, most oil-exporting emerging markets are under pressure, while broader emerging assets have also traded sideways this week amid concern over slowing US inflation and growth.
MSCI’s emerging equity index firmed 0.2 percent, after two days of losses thanks to some recovery in Asia while most emerging currencies firmed against the tepid dollar.
But the biggest winner of the day was Saudi Arabia which hit 20-month highs after MSCI put it on the watch list for index inclusion and also the promotion of Muhammad Bin Salman to the position of crown prince.
The index had jumped 5.5 percent on Wednesday. Prince Muhammad Bin Salman has spearheaded the Kingdom’s reform push, including privatizing part of the state oil firm Aramco.
Jason Tuvey at Capital Economics noted an estimated 2.4 percent weight would see $38 billion in inflows to Saudi stocks, sufficient cover the current account gap one-and-half times over. “There was a lot of optimism ahead of the opening of the Saudi stock market to foreign investors in mid-2015. Since then, however, the proportion of stocks owned by “qualified foreign investors” has remained limited and the (index) has fallen by 25 percent, taking their lead from oil prices.”
The oil factor kept most other Gulf markets under pressure ahead of the weekend and weeklong Eid holiday. — Reuters
