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Looking at Saudi Stocks? Forget Crude, Geopolitics Is King

  • Oil, stock correlation turns negative by most since 2014
  • Anti-corruption probe, tensions in the region gain focus
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Franklin Templeton's Kronfol on Saudi Reforms, Bonds

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Investors in Saudi Arabia’s stock market are more concerned with political headlines coming out of Riyadh than oil prices.

Brent crude and the Tadawul All Share Index have recently gone opposite ways, contrary to the positive trend seen for the majority of the past two decades. The 120-day correlation between the oil exporter’s main stock gauge and the commodity became the most negative in more than three years, as this month’s anti-corruption arrests and increased tensions with Iran overshadowed a recovery in the price of the commodity.