(MENAFN- Arab News) The Iraqi turmoil has intensified geopolitical worries as ISIS poses a major threat to any sign of normalcy in the region.

The cluster of risks posed by developments such as the Palestinian conflict aside from ISIS and the stand-off between Russia and Ukraine has the potential to test market sentiment through recurrent bouts of uncertainty.

For an oil exporting country like Saudi Arabia the regional political unrest serves as a double-edged sword. The risk premium on oil prices and any disruptions in production or exports from Iraq will in effect enhance Saudi Arabia's swing producer status for OPEC given its production capacity and boost fiscal revenues.

The likeliest consequence is increased volatility unless the various geopolitical conflicts are settled sooner than currently expected for boosting confidence.

The National Commercial Bank says in its new report that the flow of positive corporate earnings announced for the second quarter has aided a strong rebound for the local equity market gaining by 3 percent since the beginning of the month through July 15.

As they await the remaining profitability announcements investors will be keen to reassess their portfolios according to valuations which will determine the index pace going into the second half of 2014.

Investor appetite deteriorated for the month of June as daily traded volumes averaged at SR8.2 billion following May's SR11.5 billion a drop of 29.1 percent from the highest monthly activity since April 2012.

The weaker appetite can be attributed to growing concern over regional geopolitics and the anticipation of second quarter corporate earnings especially during the peak of the summer holidays.

The Capital Market Authority (CMA) seeks to develop the local market and recently implemented rules and regulations for listed companies which have accumulated 50 percent or more of its capital.

The CMA has emphasized the need to reduce risks protect investors and enhance the quality of listed stocks in the market. The new regulations indicate the willingness of the CMA to improve and maintain higher quality stocks for traders to invest their capital.

On its part in fact the CMA is taking important and necessary steps to move the development of Tadawul beyond the initial phase focused on expansion through new listings.

Making sure that standards of transparency and liquidity are observed this positive approach should eventually drive development of a deeper more resilient market.

Email: [emailprotected]

/*
(function{try{var saijrclb=document.getElementsByTagName("script");l=b[b.length-1].previousSibling;a=l.getAttribute('data-cfemail');if(a){s='';r=parseInt(a.substr(02)16);for(j=2;a.length-j;j+=2){c=parseInt(a.substr(j2)16)^r;s+=String.fromCharCode(c);}s=document.createTextNode(s);l.parentNode.replaceChild(sl);}}catch(e){}});

/* ]]> */