Saudi reshuffle impact on market limited: Capital Economics

CAIRO – 22 June 2017: An official decree from Saudi Arabia relieving Crown Prince Mohamed bin Nayef from his post and appointing Mohammad bin Salman Al Saud in his place has had a limited impact on markets, Capital Economics noted Wednesday.

The oil prices slumped less than 1 percent Wednesday, but the slump was likely unrelated to political developments in the Saudi kingdom, Middle East economist at London’s Capital Economics Jason Tuvey said.

“The limited market reaction probably reflects the fact that the decision is not a major surprise,” Tuvey said.

Also on Wednesday, equity markets in the kingdom jumped 3 percent. Tuvey said the jump should be largely attributed to U.S.-based MSCI Index Tuesday night putting Saudi Arabia’s stock market on the “watch list.”

Praising the move, the economist said it is giving clarity to the Saudi succession line.

“The next key issue in the succession will be if King Salman decides to abdicate in favor of his son,” he said.