Qatar stock market tumbles on diplomatic rift with Saudi, GCC states – Nasdaq

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Reuters


(Adds details, analysis)
    By Celine AswadDUBAI, June 5 (Reuters) - Qatar's stock market plunged on
Monday after Saudi Arabia, Egypt, the United Arab Emirates and
Bahrain severed ties with Doha, accusing it of supporting
terrorism. [ID:nL3N1J21X4]
    The Qatari stock index <.QSI> sank 7.6 percent in the first
hour of trade. Some of the market's top blue chips were hit
hardest, with Vodafone Qatar <VFQS.QA>, the most heavily traded
stock, sliding its 10 percent daily limit.
    Qatar National Bank <QNBK.QA>, the country's largest bank,
dropped 5.7 percent.
    Saudi Arabia, the UAE and Bahrain announced the suspension
of transport ties with Qatar, and gave Qatari visitors and
residents two weeks to leave their borders.
    With an estimated $335 billion of assets in its sovereign
wealth fund, a trade surplus of $2.7 billion in April alone and
extensive port facilities which it can use instead of its land
border with Saudi Arabia, which has been closed, Qatar appears
likely to be able to avoid a crippling economic crisis.
    The six countries in the Gulf Cooperation Council do little
merchandise trade with each other, instead relying on imports
from outside the region, and Qatar's liquefied natural gas
shipments by sea are expected to continue normally.
    Saudi Arabia and other GCC countries traditionally account
for only about 5 to 10 percent of daily trading on the Qatari
stock market, according to exchange data.
    But the diplomatic rift could have a serious impact on some
business deals and companies in the region, particularly Qatar
Airways, which can no longer fly to some of the Middle East's
biggest markets.
    Saudi Arabia called on international companies to avoid
Qatar, raising the prospect that it might try to make foreign
firms choose between doing business in Qatar and obtaining
access to the much bigger Saudi economy.
    Talal Touqan, head of resesrch at Abu Dhabi's Al Ramz
Capital, said it was not clear how long the dispute would last
and markets could recover quickly if tensions eased.
    "This is a reaction to political noise which has a direct
impact on volatility - it may be short-ived and fully reversible
if the political situation starts to abate," he said.
    Kunal Damle, an institutional broker at SICO Bahrain, said
Qatari state funds might step in to support their market later
in the day.
    Other GCC stock marikets also fell, with Dubai <.DFMGI>
losing 0.8 percent and Saudi Arabia <.TASI> falling 0.2 percent.

 (Editing by Andrew Torchia)
 ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters
Messaging: andrew.torchia.thomsonreuters.com@reuters.net))

Keywords: MARKETS QATAR/ (UPDATE 1)