Saudi Arabian stocks erased losses as US media reported the kingdom may say Jamal Khashoggi disappeared because of a botched investigation, potentially diminishing the risk of punitive action from the US.
The Tadawul All Share Index rose 0.5 per cent as of 1:01 p.m. in Riyadh, reversing declines of as much as four per cent. The government’s $5 billion bonds due 2028 advanced, cutting the yield by eight basis points, and riyal-forward contracts fell the most since March.
Media outlets in the US said the kingdom is preparing a report saying the writer died as the result of an interrogation that went wrong, and that the operation was carried out without clearance. Saudi Arabia has denied accusations that it murdered the columnist and has begun an internal investigation into his fate. US Secretary of State Michael Pompeo arrived in Riyadh on Tuesday to discuss Khashoggi’s fate.
“It already appears that the outline of a potential face-saving deal is emerging” on the Khashoggi probe, Michael Every, the head of Asia financial markets research at Rabobank in Hong Kong, wrote in a note.
The tension between Saudi Arabia and the US has raised concern about whether the country can attract foreign investors at a time it’s reforming financial markets and attempting to diversify the economy away from oil. The kingdom won inclusion in FTSE Russell and MSCI Inc. indexes for emerging markets earlier this year.