Saudi Stocks Weather Pipeline Closure Concerns with Steady Hands

Saudi Arabia's stock market has shown resilience in the face of recent geopolitical tensions, including the shutdown of its East-West oil pipeline. Despite concerns over crude exports, the benchmark rose slightly on Monday after falling 1.3% on Sunday.

Fund managers warn that a prolonged outage could test this resilience and sour investor sentiment. The market's strength is partly due to domestic institutions buying banking stocks ahead of a probable US rate hike, which should boost banks' lending margins and profitability.

The S&P Saudi Arabia total return index has returned 6% this year, while its five-year annualised return is 1.3%. Low historical valuations are also supporting the market, as investors have fewer gains to cash in and reduced selling pressure compared to Dubai.