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Dec. 14, 2018, 9:07 a.m. EST

Saudi Arabia spending billions to prop up stock market after foreign-relations bungles, including Khashoggi murder

Crown Prince Mohammed bin Salman’s government has spent billions to counter selloffs in recent months

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By Justin Scheck, Bradley Hope and Summer Said


Reuters
China and other developing countries have been intervening for years in their own stock markets. The Saudi efforts, under the watch of Crown Prince Mohammed bin Salman, stand apart because they’re geared to attract foreign investors to a market with little foreign ownership.

Saudi Arabia’s government has been spending billions of dollars to quietly prop up its stock market and counter selloffs that have followed repeated political crises in recent months.

According to a Wall Street Journal analysis of trading data and interviews with multiple people with direct knowledge of government intervention efforts, the Saudi government has placed huge buy orders, often in the closing minutes of negative trading days, to boost the market.

The Saudi stock market is a pillar of Crown Prince Mohammed bin Salman’s plan to revamp his country’s economy. Since he ascended to a top leadership position three years ago, the de facto Saudi ruler and his deputies have faced a series of foreign-relations predicaments — most recently the October murder of columnist Jamal Khashoggi — that prompted investors to dump Saudi stocks.

The Saudi stock exchange normally discloses how much stock the government buys. The recent purchases after political crises have been concealed from public view. That is because the government, rather than buying stock directly, has routed its money through asset managers at Saudi financial institutions who run funds that don’t need to reveal their clients, those people say.

It is a strategy the kingdom used last year after it launched an economic blockade of Qatar, following the arrest and torture of prominent Saudis, a corruption crackdown that some inside the government called a political purge, and after Prince Mohammed detained Lebanon’s prime minister, the Journal found.

An expanded version of this report appears on WSJ.com .

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