Most Gulf stock markets remained weak yesterday because of concern about volatile oil prices and the outlook for the global economy, while Egypt rallied on the back of buying by foreign investors. 
The Saudi index climbed in the opening minutes but soon turned lower and closed down 0.7%. Major food producer Savola plunged 9.7% after Saudi Arabia said it would cut off all commercial relations with Iran in its dispute with Tehran over Riyadh’s execution of a Shia cleric. 
Savola is one of the few Saudi companies with a presence in Iran; through an affiliate it has edible oil and confectionery factories in Tehran, which provided 11% of its total revenue in the third quarter of 2015. 
It has not yet released a statement on the impact of geopolitical tensions on its business, and some analysts said there would not necessarily be a big effect. “Savola’s Iran business is a separate company with strong local partners, so the impact on the company may be minimal,” said a Riyadh-based equity analyst. 
Rising debt insurance costs showed foreign investors continuing to hedge against geopolitical risk in the Gulf; five-year Saudi credit default swaps, used to hedge against a sovereign debt default, climbed a further 7 points on Tuesday to 173 points, the highest level since at least 2010. 
But instability in the global economy is still a bigger worry than geopolitics for the Saudi stock market, and it continued to dampen the petrochemical sector on Tuesday. 
Heavyweight Saudi Basic Industries slid 2.3 % and Advanced Petrochemical lost 3.6%. Both companies announced last week that their operating costs would increase after the government reduced price support for natural gas feedstock and hiked electricity tariffs. 
Some banks recovered part of the previous session’s losses. Islamic lender Alinma rose 1.4%, after sliding 3.7% on Monday. Al Rajhi, the largest retail Islamic bank, advanced 2.4% for its fourth straight session of gains. 
Abu Dhabi’s index rose 1.6% on the back of gains in some blue-chip banks; First Gulf Bank jumped 3.3% and Abu Dhabi Commercial Bank added 3.4%. 
Dubai stocks edged down 0.2%.
Egypt rose 0.6% with exchange data showing non-Arab foreign investors were net buyers by a large margin. Telecom Egypt surged 5.0%. 
Elsewhere in the Gulf, Kuwait’s index edged down 0.1% to 5,564 points; Oman’s index edged down 0.1% to 5,417 points, while Bahrain’s index fell 0.3% to 1,210 points.