Markets Rattled by Saudi Shake-Up, Rising Regional Tensions

Rising tensions between Saudi Arabia and Iran, as well as the kingdom’s crackdown on corruption last week that has seen over 200 jailed and $100b in assets frozen, have rattled markets in the region and kicked off efforts for wealthy Saudis to move money abroad, according to reports.

In Lebanon, where tensions are escalating between the two regional rivals following the resignation of Prime Minister Saad Hariri and allegations that he is being held in Saudi Arabia, the benchmark equity index has fallen about 3% since the weekend, according to reports.

Business Insider notes that benchmark equity indices have also tumbled in recent days in Qatar, Kuwait, Dubai, and Abu Dhabi.

But aside from companies whose leaders have been detained by officials, Saudi Arabia’s stock market has not been as dramatically affected as others in the region. Saudi Arabia’s Tadawul index is down by about 0.5% since the end of last week, but saw a volatile week after the crackdown began on November 4th. Frontera.net has an excellent breakdown of the 7 Saudi stocks that took major hits following the arrests.

Meanwhile, a report in Bloomberg today details how wealthy Saudis are seeking to avoid asset freezes by the Saudi government by moving assets out of the region. Some Saudis are “selling investments in neighboring Gulf Cooperation Council countries and turning them into cash or liquid holdings overseas,” according to people with knowledge of the matter who were not named in the Bloomberg report.

The UAE central bank has requested commercial banks and finance companies in the UAE to provide details of the accounts of 19 Saudis. The UAE, and particularly Dubai, is among the main places where wealthy Saudis park their money abroad.

“Outside the kingdom, the impact will be felt in business, finance and oil markets,” The Economist writes. “[T]he Saudi government is targeting cash and assets worth as much as $800bn. As many as 1,800 accounts have already been frozen. That—and questions about how fair the justice system will be towards the detainees—will worry investors, such as petrochemical companies, that Prince Muhammad is trying to woo into Saudi Arabia.”