Aid for Bahrain, Oman, Would Be Positive for Stocks
Foreign ministers from the Gulf Cooperation Council are expected to discuss an aid package in Riyadh, Saudi Arabia later Thursday, focused on help from the four countries with fortunate annual budgets to the other two: Oman and Bahrain.
Some observers even went as far as heralding it as a Marshall Plan for the Gulf.
The prospect of an aid package is generally positive for stocks, and if passed it would show that the GCC is "very keen on the stability of the region," Fadi Al Said, senior fund manager at ING Investment Middle East, said.
The budgets of Bahrain and Oman are "doing fine" and any assistance would be "provisional," Al Said added.
The fund is a "pro-active response" and "amounts to the realization that they have to support their neighbors," Angus Blair, head of research at Beltone Financial, said.
A fund should be targeted to address the specific issues the two countries face, and will need to be implemented creatively.
However, he remains skeptical, saying that what is happening in the Middle East and North Africa (MENA) region "is not just about money or jobs anymore, it's also about empowerment."
Details about the amount of the financial package that will be extended remain unknown.
Gulf states have so far been reluctant to discuss the subject of aid to the two countries in public.
Bahrain's Foreign Minister, Sheikh Khalid Bin Ahmed Al-Khalifa, said the plan would be announced in the meeting later Thursday.
"It's the gesture that's more important," Al Said added.
A senior Saudi portfolio manager who asked to remain anonymous maintained that the possibility of an aid package was not driving the local market at the moment.
Institutional investors, he pointed out, have been taking advantage of what are widely seen as attractive valuations across most sectors.
The Saudi stock market has gained more than 14 percent this week, after dropping 20 percent in 13 sessions on fears of the geopolitical contagion spreading to the Kingdom.
A small number of Shi'ite demonstrators have taken to the streets in eastern Saudi Arabia, with more rallies called for Friday.
Saudi Arabia's Foreign Minister Prince Saud al-Faisal has said dialogue, not protest, is the way to bring change in country.