PHOTO
DUBAI- Saudi Arabia's stock index rebounded to close higher on Sunday after initially falling steeply in response to a crackdown on corruption that led to the detention of dozens of prominent political and business figures.
A new anti-graft committee, headed by Crown Prince Mohammed bin Salman, detained 11 princes, four current ministers and tens of ex-ministers. Among them was Prince Alwaleed bin Talal, chairman of Kingdom Holding
By strengthening Prince Mohammed's authority, the crackdown could make it easier for him to push through economic reforms that investors want to see. Many foreign analysts, however, described the strategy as risky.
Raza Agha, regional chief economist at VTB Capital, said that by moving against many potential opponents since 2015, the ruling section of the royal family might be creating more enemies than friends.
"The alienation of the most powerful wings of the Saudi royal family and powerful private citizens, all of which have significant business interests, could create additional headwinds for growth via the non-oil economy."
Many local fund managers, however, saw positives in the crackdown. "It removes uncertainty over the royal succession and it's good for the economy because it tackles a problem that was ignored for too long," said one.
The Saudi stock index
Declining stocks outnumbered advancing ones 126 to 49. Several shares linked to some of the detained people slid: Kingdom Holding
But the banking sector was strong with National Commercial Bank
Elsewhere in the Gulf, Dubai's stock index
The most heavily traded stock, Deyaar Development
Egypt's index
HIGHLIGHTS
SAUDI ARABIA
* The index
DUBAI
* The index
ABU DHABI
* The index
QATAR
* The index
EGYPT
* The index
KUWAIT
* The index
BAHRAIN
* The index
OMAN
* The index
(Additional reporting by Davide Barbuscia; editing by Mark Heinrich) ((andrew.torchia@thomsonreuters.com)(+9715 6681 7277)(Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))