Qatar stocks tank on diplomatic row

March 06, 2014 - 1:30:49 am

DOHA: Qatar’s stock market tumbled 2.3 percent on a day three GCC countries announced the withdrawal of their ambassadors from Qatar. The market that was trading almost hundred points higher than the previous session on intraday, took a plunge after the news broke.

“We cannot say with certainty that the market crash was directly linked to the decision to withdraw ambassadors. But there is significant cross-border investment in Qatar’s stock market by investors from other GCC nations”, a market analyst told The Peninsula.

Investors lost over QR17bn yesterday, as the market cap dropped to QR646 from the previous trading session’s QR663bn. Local retail investors and foreign institutional investors were bearish. Total traded value almost doubled to reach QR1.20bn from Tuesday’s QR651m.

All the seven sector indices ended red with telecoms and banks dropping the most. Eleven out of the 12 banking stocks dropped as the entire telecom, real estate and transport stocks ended red. The bellwether QNB shed 3.34 percent as Ooredoo tumbled 7.02 percent.

“Because of dividend distribution, the past few sessions were not in favour of market. As the index reached its highest level in five years, the market has been witnessing profit taking. Of course, today’s news is not a good one for the investors”, Qatari stock analyst Bashir Yousef Kahloud told The Peninsula.

“The fence-sitting investors will certainly turn bearish 

after this kind of news. The index was 90 percent up around 11 am and plunged 130 points immediately after the news break”, Kahloud said.

QE’s daily trade chart shows foreign institutional investors were largely bearish yesterday. But it is not clear whether the market crash was due to pull back by the GCC investors. But there is a significant cross-border stock market investment in the GCC. Saudi investors in particular are active in all GCC markets, noted another analyst. 

“It’s retail-driven panic selling, it’s too early to say if this would have an impact on fund allocations for institutional investors, because we don’t know how the situation will evolve”, Reuters quoted Ali Adou, portfolio manager at The National Investor as saying.

Elsewhere, Saudi Arabia’s share index was choppy, but managed to close up 0.1 percent. Dubai’s measure slipped 0.5 percent. Small-cap shares suffered the most, while blue chips were steady. Abu Dhabi banks helped support the emirate’s benchmark, which ticked up 0.4 percent after a volatile session.

In Egypt, investor sentiment was buoyed after army chief Field Marshal Abdel Fattach Al Sisi, widely expected to win the presidency of the Arab world’s most populous country, gave his clearest signal yet that he would run for president. Cairo’s benchmark index rose 1.1 percent, taking year-to-date gains to 18.3 percent.

The Peninsula