Qatari stocks had their worst day in over seven years yesterday, as GCC financial institutions dumped their positions following the decision by the UAE, Saudi Arabia, Bahrain and Egypt to suspend diplomatic and transport links with the country.
But the impact on other regional bourses was comparatively mild, with foreign investors largely retaining positions in the UAE and elsewhere.
The move by the four countries – later joined by others including Libya, Yemen and the Maldives – to suspend diplomatic ties and air, sea and road transport links with Qatar rocked the country’s stock market.
The Qatar Exchange Index plunged 7.3 per cent, erasing nearly 30 billion Qatari riyals (Dh30.26bn) off its market cap and leaving it at its lowest level since mid-2013.
Every stock ended the day in the red, with Masraf Al Rayan, QNB and Industries Qatar among the worst big names affected.
GCC financial institutions exited Qatari stocks in their droves, with net sales of 162 million riyals, the most by any class of investor for the day.
The country’s US dollar-denominated bonds tumbled and contracts used to speculate that the country’s currency will weaken surged the most since 2009.
The sharp fall in Qatari stocks initially dragged other bourses in the region sharply lower, but indexes recovered ground throughout the day to post mostly moderate losses, indicating that the impact of the stand-off will be limited beyond Qatar.
“You’re definitely going to get economic repercussions within Qatar and pressure on markets, due to its reliance on close ties with the rest of the GCC,” said Ali Adou, the director of asset management for The National Investor in Abu Dhabi.
“But in other countries like Saudi Arabia and the UAE we’ve seen stocks rebound pretty quickly during the session, so it’s hard to draw conclusions about the medium-term impact.”
Shares in Saudi Arabia were down by as much as 0.8 per cent in the early afternoon, before rallying to finish the day up by 0.5 per cent, thanks to gains by Sabic and Jabal Omar Development.
Shares in Dubai fell by as much as 2.3 per cent before steadying to finish just 0.7 per cent lower. Abu Dhabi stocks ended the day virtually unchanged, closing up 0.03 per cent.
“In the UAE in particular the selling has been driven by retail investors, who are just taking a bit of risk off the table, rather than by institutions,” said Mr Adou.
“Any positive news coming in the next days or weeks could see those same retail investors coming back to the market. Meanwhile I don’t think this event is going to persuade foreign investors to start selling out of the region.”
Emaar Properties and Aramex led Dubai stocks lower, finishing down 1 per cent and 2.8 per cent, respectively.
In Abu Dhabi, Etisalat and Dana Gas led stocks higher, cancelling out losses by National Bank of Umm Al Qaiwain and Aldar Properties.
Oil prices rose by as much as 1.6 per cent to US$50.74 per barrel in the morning, with the unexpected escalation of tension between Arabian Gulf producers catching traders off-guard.
However, the commodity gave up gains in the afternoon on lingering concerns over global oversupply. Brent crude fell by as much as 1.6 per yesterday afternoon, trading as low as $49.15 per barrel.
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More on the Qatar row
■ Qatar stocks slump as GCC neighbours cut ties
■ Little risk to UAE-Qatar gas shipments amid diplomatic row
■ Emirates and Etihad to suspend flights to and from Qatar amid diplomatic dispute
■ Qatar rift could lead to credit rating downgrade and lower non-oil growth
■ DP World: 'Too early to comment' on Qatar row implications
■ UAE Exchange chief says it is monitoring Qatar row and trading on riyal is normal
■ Closure of ports and road links could have an impact on Qatar's contracting market
■ UAE retailers keep a close eye on Qatar developments
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* with agencies
jeverington@thenational.ae
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