A screen displaying stock information is seen at Qatar Stock Exchange in Doha, Qatar, June 5, 2017. REUTERS
DUBAI: Qatari stocks plunged as an alliance of four Arab countries cut diplomatic ties with the nation, escalating a political crisis in the Gulf.
Doha’s QE Index tumbled the most since January 2016 after the governments of Saudi Arabia, Bahrain, the United Arab Emirates and Egypt said in statements they will suspend air and sea travel to and from Qatar. Dubai’s DFM General Index fell a second session and the ADX General Index headed for the first drop in three days.
The disagreement marks an unprecedented low in the relationship between the Arab nations, and for relations in the six-nation Gulf Cooperation Council in particular. It’s a stark reminder to investors of the potential volatility and geopolitical risks associated with the region, at a time when markets like Saudi Arabia and Egypt are intensifying efforts to lure foreign cash.
“For people that don’t know the region very well, they have an image of the Middle East, including the GCC, to be a somewhat unstable region, and I think this maybe confirms what they had feared,” said Tarek Fadlallah, chief executive officer of Nomura Asset Management Middle East.
“For those who are familiar with the region, it will be unsettling, but maybe not critical on how they look on making investments for the foreseeable future.”
The QE Index dropped 5.6% as of 9:33 a.m. in Qatar. The DFM General Index slipped 0.8% and the ADX General Index lost 0.3%.
The volume of shares traded in Doha was more than 10-times the intraday average. It’s currently the holy month of Ramadan, when investor activity in the Middle East is traditionally depressed as Muslims fast between dawn and dusk. - Bloomberg
