Saudi Stocks Hit by Political Purge, GCC Affected Too

Saudi Arabia’s stock market fell over 1.5 % on Monday as a purge by its Crown Prince on fellow royals, ministers and businessmen appeared to be widening, though it was offset by gains elsewhere including a record high for South Africa.

The heaviest Saudi falls saw a near 5 % slump in detained billionaire Prince Alwaleed bin Talal’s Kingdom Holding after it had fallen almost 8 % on Sunday.

Al Tayyar Travel plunged 10 % too, after the company quoted media reports saying Nasser bin Aqeel al-Tayyar, still one of its board members, had also been held by authorities.

Saudi’s Crown Prince Mohammed bin Salman had moved to consolidate his power and crack down on corruption with a cabinet reshuffle and a string of detentions of prominent figures.

Prince Alwaleed, a nephew of the king invests in lots of big international firms too such as Citigroup and Twitter . He was among 11 princes, four ministers and tens of former ministers detained, officials told Reuters.

Marcus Chenevix, MENA analyst at TS Lombard called Alwaleed bin Talal’s arrest “hugely concerning”. “What it tells investors is that Saudi politics can’t be ignored. And that’s worrying because Saudi politics is a black box,” he said

Shares in National Industrialization Co (Tasnee), in which Alwaleed’s Kingdom Holdings holds a 6.2 % stake, fell another 2 % while Banque Saudi Fransi, in which Kingdom bought a 16.2 % stake in September, dipped 0.5 %.

The jitters were felt elsewhere in the GCC too. Qatar’s main bourse dropped almost as much as Saudi’s - 1.2 % - as concerns simmered their about its ongoing spat with the Saudi elite.

Lebanon’s eurobonds fell widely too after its Prime Minister Saad al-Hariri resigned on Saturday, saying he believed there was an assassination plot against him and accusing Iran and its Lebanese ally Hezbollah of sowing strife in the Arab world.

His resignation, which came as a surprise to Beirut’s political establishment, brought down the country’s fragile coalition government and plunged the country into a new political crisis.

Other major emerging markets looked far calmer in comparison, even some of those that have been the most volatile recently.

South Africa’s stock market hit a record high though the rand was on the back foot again having tumbled more that 2 % on Friday amid onging worries about its remaining investment grade credit rating.

Turkey’s lira, another EM currency that has been slammed recently regained 0.6 % against the dollar meanwhile.

It has lost more than 12 % since early September as concerns build about its rising inflation and that rising global bond yields will make its large proportion of dollar-denominated debt more costly to service.