Saudi Tensions Prompt Gulf Investors to Dump Region's Stocks

Updated on
  • GCC investors sold most in net terms in Dubai since February
  • Saudi investors were net sellers of shares in Abu Dhabi

StanChart's Maratheftis Says Saudi Arabia Is Changing

Saudi Arabia’s crackdown on corruption and increased tension between the kingdom and Iran has sent ripples through neighboring stock markets, prompting investors from within the region to sell and pushing benchmark indexes lower.

Investors from the six-nation Gulf Cooperation Council sold a net 92 million dirhams ($25 million) of stocks on Dubai’s main equities market Tuesday, the most since February. Increased tensions in the region have helped fuel a losing streak of six consecutive days for the index, the longest since May 2016. It slumped 1.9 percent on Wednesday, the most in a year.

Perceptions of risk among equity investors rose across the Gulf after Saudi Arabia arrested dozens of princes, ministers and former and current officials last weekend. Concerns of a renewed confrontation between the kingdom and Iran increased after Lebanese Prime Minister Saad Hariri resigned on Saturday, announcing his decision from Saudi Arabia and blaming Iran and the Hezbollah militants it backs for the move. Benchmarks in Abu Dhabi and Dubai have slumped in each session since Sunday, while gauges in Kuwait and Bahrain have fallen in three of the four trading days.

In Abu Dhabi, whose stock exchange classifies buyers and sellers by nationality, investors from Saudi Arabia were net sellers by the most in almost a month, with outflows this week exceeding 20 million dirhams.

Kuwait’s main gauge fell the most in the region after Dubai’s this week, dropping 5.6 percent by Wednesday. The benchmark fell this week to the lowest level since January, paring its gains this year to 7.5 percent, while most other regional key indexes are in negative territory for 2017.

— With assistance by Dana El Baltaji

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