Saudi stocks drop after corruption probe detains businessmen, officials

DUBAI (Reuters) - Saudi Arabia's stock market fell in early trade on Sunday after Crown Prince Mohammed bin Salman moved to consolidate his power and crack down on corruption with a cabinet reshuffle and a string of detentions of prominent figures.

The Saudi equities index was down 1.0 percent after 25 minutes of trade as declining stocks overwhelmed advancers by 155 to 15. Investment firm Kingdom Holding, owned by billionaire Prince Alwaleed bin Talal, who was one of those detained, plunged 9.9 percent.

Shares in National Industrialization Co (Tasnee), in which Kingdom holds a 6.2 percent stake, fell 1.3 percent and Banque Saudi Fransi, in which Kingdom bought a 16.2 percent stake in September, sank 2.8 percent.

 

However, much of the market escaped panic selling and some blue chips were little changed, with top petrochemical producer Saudi Basic Industries down only 0.2 percent.

Saudi-owned Al Arabiya television reported a new anti-corruption committee chaired by Prince Mohammed had detained 11 princes, four current ministers and tens of former ministers, as well as several senior businessmen.

Analysts said the news worried the stock market because businessmen implicated in the probe might end up having to sell some of their equity holdings, which could temporarily at least weaken prices. New investment in the market by the businessmen could shrink.

However, they said local investors might ultimately welcome the prospect of Prince Mohammed increasing his power and reducing uncertainty about his authority. Economic reforms such as privatisation and development projects could potentially now move faster.

Elsewhere in the Gulf, Dubai's stock market fell 0.9 percent as the most heavily traded stock, Deyaar Development, lost 1.9 percent. Qatar's stock index dropped 0.6 percent in a broad-based decline, with nine of the 10 most active stocks weaker.

(Reporting by Andrew Torchia; Editing by Matthew Mpoke Bigg)