Geopolitics, Saudi corruption probe may keep region soft

DUBAI: Gulf stock markets may have a soft tone because of rising geopolitical tensions and continued jitters related to Saudi Arabia’s anti- corruption probe.

Buying of stocks by state-linked funds helped to support the Saudi bourse last week and on Thursday, stocks related to people detained in the probe, such as Kingdom Holding, regained a little strength, another positive sign.

But the economic impact of the investigation has yet to run its course. Over 2,000 Saudi bank accounts have now been frozen and the number is still rising, bankers say, with a potentially negative effect on payments in the banking system, while wealthy Saudi individuals may continue to sell stocks in Riyadh and other Gulf markets to try to move some money out of the region.

Geopolitical tensions worsened further at the weekend and there is now considerable concern about the possibility of Saudi action against Iranian interests in the region.

Bahrain said an explosion which caused a fire at its main oil pipeline on Friday was caused by ‘ terrorist’ sabotage, linking the attack to Iran.

Saudi Arabia’s energy ministry said pumping to Bahrain - an important source of revenue for Bahrain’s economy – had been suspended and the kingdom was stepping up security precautions at its own facilities. — Reuters