Meanwhile, Saudi Stocks Crash Near 7 Year Lows

Tyler Durden's picture

Despite the Deutsche-driven bounce in Western markets on Friday, the 'panic in The Kingdom' that we highlighted earlier in the week is accelerating fast. Following demands from officials for banks to reschedule loans to clients affected by last week's decision to cut salaries and bonuses for state employees, Middle-East bank stocks are collapsing and Saudi's Tadawul Index is back near its 2009 lows...

The weakness - despite crude strength - was driven by Saudi Arabia’s central bank decision to direct local lenders to reschedule the consumer loans of clients affected by last week’s decision to scrap the bonuses and allowances of many state employees. As Bloomberg reports,

The Saudi Arabian Monetary Agency, as the central bank is known, said in a statement on its website on Sunday that the step was part of efforts to “reduce pressure on borrowers” whose income was cut by the government’s Sept. 26 package of measures to further trim spending.


The agency said local banks must obtain the client’s approval before rescheduling a loan. Borrowers should present proof that their income has been affected by the recent cuts to the nearest bank branch, the regulator said. Loans taken after the cabinet decision to end the payments won’t be rescheduled.


Under Deputy Crown Prince Mohammed bin Salman, the world’s biggest oil exporter has already delayed payments owed to contractors and started cutting fuel subsidies as it tries to manage lower oil prices. The measures may help narrow the budget deficit to 13 percent of gross domestic product this year and below 10 percent in 2017, according to International Monetary Fund estimates.


The cancellation of bonuses and allowances -- and a simultaneous decision to lower ministers’ salaries by 20 percent -- further spread the burden of shoring up public finances to a population accustomed to years of government largesse. Yet analysts have warned the cuts risk deepening the kingdom’s economic slowdown by damaging consumer confidence.

Which collapsed Saudi banking stocks to record lows...


And trust is rapidly being lost in the Saudi interbank markets...


And this is a major problem...

No help at all as oil prices rebounce post-Algiers.

As the forward market implies dramatic devaluation is looming...


And investors are loading up on record amounts of CDS protection (red line)...


Charts: Bloomberg

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readyforit's picture

Thats more than a tad awful.

VD's picture

print pussycat, print, print, print.

lance-a-lot's picture
lance-a-lot (not verified) VD Oct 2, 2016 9:58 PM

Congress's stupid Sept 11 Bill is the DEATH KNELL for America.

Silver Bug's picture

A global collapse of montrous proportions is brewing as we speak. Contagion is going to ripe this corrupt fiat system to shreds. Its going to rough, very rough, but the medicine needs to be swallowed for the ultimate reset to begin.

Paul Kersey's picture

So the Saudis don't have money to pay their contractors, but they have enough money to pay for this:


A SENATE RESOLUTION opposing a $1.15 billion arms transfer to Saudi Arabia garnered support from only 27 senators on Wednesday. A procedural vote to table the resolution passed 71-27.

"The Obama administration announced the transfer last month, the same day the Saudi Arabian coalition bombed a potato chip factory in the besieged Yemeni capital. In the following week, the Saudi-led forces would go on to bomb a children’s school, the home of the school’s principal, a Doctors Without Borders hospital, and the bridge used to carry humanitarian aidinto the capital."

NoDebt's picture

Foreign stock markets tell the truth more than our own about the state of the world economy.  The US is FULLY invested in the concept that our markets must hold firm, regardless of reality.  Other countries have no such analog, or it exists to a much lesser degree.  

If you're invested in the US market you should be thanking God (or, rather, Janet Yellen) that your stocks have merely been flat for 2 years instead of falling off the table.  You could have done a lot worse.



Master Toms Dog's picture

I'm short and could have done a lot better.

OTOH, I can catch frisbees really well.

giovanni_f's picture

SA should do what the bankrupt US does: Drastically reduce military spending and close some of the ~ 1000  military bases. 

Elco the Constitutionalist's picture
Elco the Constitutionalist (not verified) Silver Bug Oct 3, 2016 1:40 AM

That ignores the fact that the Rothschilds own literally all of the money in the world. They can keep this bitch going a lot longer than you can remain solvent.

spdrdr's picture

Alluah Ackbar! 

We will break the resolve of the infidel pigs!  OPEC will curb production, you will see, and the price of oil will rise!

Oops. We don't need any increase in fracking or other unconventional recovery methods.

Inshillah!  We will continue to Drill, Drill, Drill, Baby! until such time as the infidels are brought to their knees!

This will, Praise Allah, work out for all of us!

sun tzu's picture

Funny how the Arab spring only affected countries that were not in bed with Hitlery's CIA. Countries like Saudi Arabia and Jordan came out just fine while secular governments like Libya, Syria, and Egypt were hit the hardest. 

ozziindaus's picture

Yinon's "backup" plan-absolute financial collapse. Different method, same outcome

TheRideNeverEnds's picture

For them, it bullish for US equities. Another reason no not hike rates, probably not sufficiently bad for them to take rates negative and start outright purchasing e-minis; that comes later.

crakerman's picture

allah'Akbar bitchez!

The Bell Rang's picture

Die Pond Scum.........

CNONC's picture

If they die, the festering corpse winds up under our mattress.  Rial dies, petrodollar may soon follow.

CHoward's picture

I understand pig farming is profitable.  Interested SA?

Cluster_Frak's picture

Braking the peg will devalue currency by what? 30%?




Herdee's picture

911 settlements coming, then the carpet bombing starts up.

Rabid Bear's picture

I wonder if the carpet bombing will start at the Bush ranch in Texas

Occams_Razor_Trader's picture

That's just so they can cry poor- when the 911 families lawsuits hit! (we all know who mastermined it- but the Saudis ran the money.)

NoYouAreAnAsshole's picture

World wide, the Saudis have spent over $100 billion dollars to build and operate mosques across the globe.  They have spent over $32 billion in the US alone to bring their religion of death to our shores. 

So, fuck you Saudi Arabia. 

Too bad; so sad "royal" shitheads. 


Curiously_Crazy's picture

It's also back to where it was at - get this - January of this year.

This hyperbole is tiring. I'm not saying there aren't issues on where things are headed as there obviously is. But come on Tylers we're on ZH we know how to read a fucking graph and a long 'pencil line' bisecting other lows (or near lows) to hit a seven year clickbait title doesn't do you justice.

And it case you missed it - the market is over 1000 points from it's 2009 lows so if a further 20% drop to hit 2009 lows means 'near' then I've got some sand in a desert I know to sell you.


ozziindaus's picture

The three tried and true ways to absolutely guarantee the destruction of a nation:

1. Political
2. Financial
3. War

The Middle East, with the exception of the special one, is hitting the trifecta.

Korprit_Phlunkie's picture


If suadi arabia gets weak enough, for whatever reason, Iran will take them out. Finally good for something, maybe that’s what Hussein wanted all along.


williambanzai7's picture

Sand Monkey Mayhem

NoPension's picture

" shut 'er down, Clancy....she's pumpin' mud"

RogerMud's picture

think of the potatoe chips!!!

Jack Oliver's picture

The Saudi's did a 'deal' - Crash the oil price to stifle 'emerging' resource based economies in exchange for control of Syria's resources !! 

Looks like thay backed a LOSER !! 

Freddie's picture

It was also designed to F over Putin and Russia.  The zio-neo Cons were hoping it would weaken Putn so Soros and his parasites could get back into Russia.  They underestimated Putin and Russia.

Putin talks about his baptism outside the church he was baptised in.

His mother had to sneak him out as a baby to be baptised because his father was a communist.

Spungo's picture

Good. Fuck that country.

Farqued Up's picture

IMO, SA is broke for being the US proxy in Yemen, and the London DC Cabal have stolen them blind.

KashNCarry's picture

To quote crakerman; "Aloo Fuckin' Akbar bitches..."

Fireman's picture

May the evil crypt of Saud and its subhuman necromongers burn and burn soon!

zippy_uk's picture

Solar, Wind, Batteries and fracking technology are progressively puting a cap on energy pricing and the first three are all carbon free. The Saudi's are waking up to the fact they are going to have to work for a living, and people don't tend to hire terrorists....

anti-republocrat's picture

Meanwhile, the price of camels in KSA has quadrupled everywhere except in the south, near Yemen.