After Thursday’s reports that Saudi Arabian security forces had shot at protesters in the country’s eastern region, there was a good chance the long-anticipated Day of Rage would be one of today’s big market stories.
Instead the earthquake in Japan has rightly been the focal point, while the Day of Rage fizzled. The Washington Post reported earlier that all was quiet even in Qatif, the site of yesterday’s shootings.
Of course, when all public protests are banned, women are prohibited from driving and thousands of troops have been dispatched to the eastern province — well, maybe we should be less surprised that the Day of Rage was relatively quiet.
It’s also worth noting that demonstrators are less coordinated and less clear in their demands than those, for instance, in Tunisia and Egypt. As the Eurasia Group pointed out on Thursday:
There will also likely be protests tomorrow in Jeddah and Riyadh. But these protests, organized by Saudi opposition figures, are not coordinated with Shia activists in the east. In addition, the protestors in Riyadh and Jeddah have different concerns than Saudi Shias.
And even tomorrow’s participants- unlike protestors in Tunisia, Egypt, and Bahrain- will not be chanting, “the people demand the fall of the system.” The majority of Saudi opposition figures want reform within the existing system. They are appealing to the King, rather than demanding his departure. Thus, while there may be some unrest tomorrow, it will not threaten al Saud in the short term- but things could get complicated if the Saudi security forces overreact.
As for the muted day’s impact on asset markets, here’s a chart and some commentary from Markit:
5Y CDS for Saudi Arabia was only about 5 bp wider today. The moderated move was aided in part by the earthquake in Japan lowering demand expectations for oil (Brent Crude fell significantly on the news). Japan is the world’s 3rd largest consumer of oil.
The Saudi Arabian Stock Exchange is closed on Fridays, so we won’t know how equities react until tomorrow (it’s open on Saturdays).
But here is year-to-date trading in the Tadawul All-Share Index (TASI):
The acute dip, of course, was the result of last week’s contagion shivers, in particular the unrest in Bahrain.
The snapback since is likely owed to a combination of soothed fears, comments from the Saudi finance minister that the Public Pension Agency had bought shares, and a rally by Saudi banks earlier this week on renewed speculation that a (rather long-awaited) mortgage law would soon be approved.
So it seems that all will remain calm in Saudi asset markets in the immediate term. The Saudi capacity puzzle, and deeper structural issues, on the other hand, remain unsolved.
Related links:
Saudi contagion shivers – FT Alphaville
Saudi capacity puzzle – FT Alphaville
Saudi Price Alwaleed: Entire Day Of Rage Was A “Tempest In A Teacup” – Business Insider