Saudi rebounds; not affected by Nayef death
Riyadh, June 17, 2012
Saudi Arabia's index roses in early trade, recovering the previous day's losses, with the death of the kingdom's crown prince no longer affecting the market. The benchmark climbed 0.3 per cent to hit 6,745 points.
It fell 0.3 per cent on Saturday, having been down as much as 2.6 per cent intra-day in a knee-jerk reaction to Crown Prince Nayef's death eight months after he became heir to the throne.
The benchmark dropped 15 per cent from April 3's 3-1/2 year peak. 'Yesterday's volatility was to be expected when we have this kind of news, but the market then recovered and I don't think it will be major factor today - Prince Nayef was known to have had health problems so his death wasn't a complete surprise,' says a Riyadh-based fund manager, asking not to be identified.
'The authorities will probably give some clarity on the succession soon and today's trading will be more linked to what's happening outside the region,' he remarked.
Although Nayef was known for his strong management of security issues in the country, analysts see no reason to think foreign or political policies, much less economic policies, will change under his successor.
The most likely successor is believed to be Prince Salman, 76, who is seen as a pragmatist with a strong grasp of the intricate balance of competing princely and clerical interests.
He was named defence minister last year.
The Saudi market was helped on Sunday by the fact that equity markets rose on Friday. Investors fear Sunday's Greek elections could unleash fresh turmoil in the euro zone, if the next government in Athens scraps Greece's bailout deal, but this was offset by hopes that the world's major central banks would make a co-ordinated response to ease any market dislocation.
In Saudi Arabia, shares in Al-Rajhi Bank, the kingdom's largest listed lender, climbed 0.3 per cent, while Saudi Basic Industries Corp and Banque Saudi Fransi each added 0.6 per cent.
Saudi firms are expected to start announcing second-quarter earnings from early July. 'The Q2 results will help at least to stabilise the market, but these will be of secondary importance compared with what's happening in Europe, which is flitting between risk-on and risk-off mode,' revealed the fund manager.
'We should see some buying in select names ahead of results, particularly petrochemicals - people are expecting bad results, but not as bad as recent price movements would justify.'
The petrochemicals index climbed 0.4 per cent, trimming its year-to-date losses to 4.6 per cent. The sector has loosely tracked declines in oil prices, with crude seen as a key indicator for both petrochemical product prices and likely demand.-Reuters