Kingdom Shares Recover From Shock of Prince Alwaleed's Detention

(Bloomberg) -- After being detained for more than two months, he’s out. And Prince Alwaleed’s Kingdom Holding Co. shares surged back to where they were before Saudi Arabia started its crackdown on corruption last year.

Kingdom Holding rose 2.5 percent to 10.29 riyals on Monday, exceeding the level it was trading at before Saudi Arabia shocked investors with the arrest of dozens of high-profile businessmen and princes last year. About 3 million shares were exchanged, the most since February 2016.

The billionaire, who owns 95 percent of Kingdom Holding, reached a settlement with authorities and returned home on Saturday from the Ritz-Carlton in Riyadh, which served a jail for the nation’s elite since November. During that time, his investment firm is said to have sold its stake in Beirut’s Four Seasons Hotel for about $100 million to $115 million including debt. Kingdom Holding owns stakes in companies from Citigroup Inc. to Twitter Inc.

The shares have advanced about 27 percent since falling to a 2011-low in November, compared with a 9.2 percent gain in the Tadawul All Share Index.

$100 Billion

The government is emptying out the Ritz as it winds down the first phase of Crown Prince Mohammed Bin Salman’s anti-corruption campaign. The government expects to gather more than $100 billion from settlements made with detainees in exchange for their freedom.

“When the corruption purge started, no one exactly knew how this was going to pan out and what was coming next, which created short-term uncertainty,“ said Ali Taqi, the head of equities at Rasmala Investment Bank Ltd. in Dubai. “That blurred visibility is what typically rubs investors the wrong way. Many investors decided to stay away or exit the Saudi market with the intention to come get back in with improved visibility.”

Saudi stocks missed out on a rally that sent emerging-market equities soaring to less than 100 points from an all-time high because of investor concern over the crackdown and political tensions in the region. While the MSCI Emerging Markets Index advanced 34 percent last year, the Tadawul All Share Index added 0.2 percent.

Still, the Saudi gauge, which rose for three straight days, climbed this month to the highest level in more than two years. BlackRock Inc.’s iShares MSCI Saudi Arabia Capped ETF, an exchange traded fund that tracks stocks from the kingdom, has registered inflows of about $12 million so far this year. That’s more than all of 2017, data compiled by Bloomberg show.

To build investor confidence, the crackdown “should be seen as an exceptional development, and not the new norm,” said Allen Sandeep, the head of research at Naeem Brokerage in Cairo, Egypt.

To contact the reporters on this story: Dana El Baltaji in Dubai at delbaltaji@bloomberg.net, Filipe Pacheco in Dubai at fpacheco4@bloomberg.net.

To contact the editors responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net, Shaji Mathew

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