Cleric’s execution is bad omen for MENA stocks

RiyadhThe execution of Shia cleric Sheikh Nimr-Al-Nimr by Saudi Arabia, which triggered an invasion of the Saudi Arabian embassy in Iran, is said to underline a worsening rivalry between the two powers that spells trouble for regional equities.

According to emerging market investment firm Exotix Partners, the execution is one of several indicators of worsening tension between Saudi Arabia and Iran, which for decades have vied for regional dominance.

Other indicators include disagreements over the war in Iraq and Syria, the severance of diplomatic ties and the recent end of a ceasefire in war-torn Yemen, in which both countries have military involvement.

According to Hasnain Malik, head of frontier markets equity strategy at the firm, the deterioration in relations is significant because the mounting rivalry between Saudi Arabia and Iran reflects growing geopolitical risk in the region.

“Saudi and Iran relations have rapidly frosted over,” writes Malik, in a research note, adding that the trend reinforces his preference to invest in south Asian equities instead of MENA equities this year.

©2016 funds global mena

Related Articles