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Sun 30 Mar 2014 10:39 AM

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New deputy crown prince may boost Saudi market

The appointment of Saudi Arabia's Prince Muqrin bin Abdulaziz as deputy crown prince may bolster investor sentiment by reducing uncertainty over the kingdom's succession plan

New deputy crown prince may boost Saudi market
Saudi Arabias Prince Muqrin bin Abdulaziz

The appointment of Saudi Arabia's Prince Muqrin bin Abdulaziz as deputy crown prince may bolster investor sentiment because it reduces uncertainty over the kingdom's succession plan, which had long clouded the market.

Muqrin, the youngest son of the kingdom's founder King Abdulaziz al-Saud, is now second in line to succeed King Abdullah in the world's top oil exporter, after his half-brother Crown Prince Salman.

"It could very well be a positive for the market," says John Sfakianakis, chief investment strategist at Saudi investment firm MASIC. "I think that gives plenty of clarity to institutional investors, especially the international ones."

Muqrin accompanied King Abdullah as he met U.S. President Barack Obama on weekend during a visit designed to allay the kingdom's concerns that its decades-old U.S. alliance had frayed.

Saudi Arabia's main stock index slid 0.3 percent to 9,423 points last Thursday as most regional bourses went through minor corrections.

In the United Arab Emirates, Emirates NBD (ENBD) could gain after brokerage EFG Hermes raised its fair value estimate on the Dubai bank to 10.00 dirhams per share from 8.10 dirhams and upgraded its rating for ENBD to buy from neutral. The stock ended Thursday at 8.25 dirhams.

EFG Hermes said it expects ENBD to reclassify its 9.4 billion dirhams ($2.56 billion) exposure to Dubai World to a performing loan, which would redice provisioning.

"We believe that it is now just a matter of time before this exposure is reclassified as a performing loan. Strong improvement in asset values and progress on asset sales has eased concerns on Dubai World's ability to repay its liabilities, in our view," EFG Hermes said in a note.

Outside the Gulf, global equity markets ended higher on Friday and the price of Brent crude oil closed above $108 a barrel for its first weekly rise in five, helped by data showing a rise in U.S. consumer spending in February.