DUBAI, June 21 (Reuters) - Saudi Arabia’s stock market rose sharply in early trade on Wednesday after Deputy Crown Prince Mohammed bin Salman, architect of the kingdom’s economic reforms, was promoted to the post of crown prince.
The Saudi stock index was 2.2 percent higher after seven minutes of trade. National Commercial Bank, the biggest listed lender, surged 4.8 percent.
Prince Mohammed’s promotion gives further assurance that key reforms – including a plan to sell a stake in national oil giant Saudi Aramco, and austerity measures to close a budget deficit caused by shrunken oil revenues - will continue.
“We do not expect to see any major changes to key areas of policy, including economic – Prince Mohammed bin Salman has already been driving the economic agenda and the push to transform and liberalise the economy,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
“This isn’t unexpected though it came earlier than expected,” said a Jeddah-based fund manager. “There won’t be a risk of the reforms being scrapped.”
Also, index compiler MSCI announced overnight that it would start considering whether to upgrade Saudi Arabia to emerging market status; the upgrade would occur in two phases, in May 2019 and August 2019. That news has mostly been priced in, however, fund managers said.
Other Gulf stock markets were weak, with Dubai down 0.6 percent and Qatar 0.8 percent lower, because of weak oil prices.
Brent oil sank to around $46 a barrel overnight, its lowest level since November, before global oil producers agreed on output cuts in an effort to prop up prices. Oil’s slide could mean Gulf governments will not boost spending this year as much as investors have been hoping. (Reporting by Celine Aswad and Andrew Torchia)