Saudi closes higher after steep fall on corruption crackdown

Dubai : Saudi Arabia’s stock index rebounded to close higher yesterday after initially falling steeply in response to a crackdown on corruption that led to the detention of dozens of prominent political and business figures.

Many local fund managers saw positives in the crackdown. “It removes uncertainty over the royal succession and it’s good for the economy because it tackles a problem that was ignored for long,” said one.

The Saudi stock index sank as much as 2.2 per cent at one stage but recovered in the late afternoon to close 0.3pc higher in active trade - with the help, one regional fund manager said, of government funds that deliberately intervened to support the market.

Declining stocks outnumbered advancing ones 126 to 49. Several shares linked to some of the detained people slid: Kingdom Holding plunged 7.6pc and National Industrialization Co (Tasnee), in which Kingdom holds a 6.2pc stake, fell 1.7pc.

But the banking sector was strong with National Commercial Bank, the biggest lender, climbing 0.9pc. Banque Saudi Fransi, in which Kingdom bought a 16.2pc stake in September, added 1.0pc.

Elsewhere in the Gulf, Dubai’s stock index fell 1.0pc as real estate-related shares dropped. Saudis are major investors in Dubai’s real estate market and a big crackdown on corruption could conceivably affect investment by them.

The most heavily traded stock, Deyaar Development, lost 2.6pc and blue chip Emaar Properties sank 1.4pc.

Egypt’s index lost 1.0pc as real estate firm Talaat Mostafa pulled back 4.3pc in heavy trade, after surging on Thursday on the back of strong quarterly earnings.