DUBAI: Saudi Arabian stocks sank after drone strikes highlighted the vulnerability of the kingdom’s oil facilities to terrorist attacks.
The drop erased this year’s gain and lowered the gauge’s valuation to the weakest since March, before the kingdom’s stocks were included in MSCI Inc’s emerging-market gauge.This is a “very tense situation,” elevating risk in the region “to unprecedented levels,” said Mohammed Ali Yasin, the chief strategy officer at Al Dhabi Capital in Abu Dhabi.
Iran-backed Houthi rebels in Yemen, who’ve launched several drone attacks on Saudi targets in the past, claimed responsibility for the assault on Saudi Aramco’s Abqaiq plant, one of the world’s largest crude-processing facilities.While the incident won’t derail Aramco’s initial public offering, it may impact the company’s valuation, according to the Eurasia Group.
Government funds may swoop in to limit the decline in Saudi stocks, said Joice Mathew, the head of equity research at United Securities in Muscat.