November 08, 2017 12:00 AM

Gulf states react to Saudi purges

The fallout of Saudi Arabia’s Crown Prince Mohammed bin Salman rapid consolidation of power has reached beyond the lives of those detained and impacted equity markets across the Gulf states. The five major indexes in the region were down an average 1.9% since the end of last week and lost a total $2.4 billion.

The Kuwait stock exchange index had the most dramatic drop, losing $7.2 during the week. Indexes in the region tend to be top heavy with the top 10 stocks accounting for more than 50% of total market value. In the Kuwaiti index, the National Bank of Kuwait and the Kuwait Finance House account for about 27% of the total market cap; these stocks lost 8.1% and 12.4%, respectively, and a total of $2.6 billion in market cap.

The purges seemed to be welcomed, at least economically, in Saudi Arabia where the 10 largest holdings in the Tadawul index added $3.5 billion.