Qatar’s stock index sank to a five-year low on Wednesday as foreign funds continued to sell ahead of third-quarter corporate earnings, while banks in Egypt were hit by news that the central bank would raise the required reserve ratio.
The Qatari index lost 1.6 percent in thin trade, bringing its losses since four other Arab states broke off ties with Doha on June 5 to nearly 18 percent. Banks were particularly hard hit, with Commercial Bank down 3.6 percent.
“There is too much uncertainty and negative headlines about the Qatari banking sector. Third-quarter results will be watched very closely to see just how much the diplomatic rupture has hurt those banks’ asset quality,” said a Paris-based fund manager.
Oil-linked stocks were also weak, with oil and gas drilling service provider Gulf International Services dropping 3.9 percent—taking its losses for the year to 40.5 percent.
In Egypt, the largest listed lender, Commercial International Bank, fell 2.1 percent and Abu Dhabi Islamic Bank Egypt tumbled 6.1 percent after the central bank said it would raise the required reserve ratio to 14 percent from the current 10 percent on October 10.
The Riyadh index rose 0.6 percent, with the main support coming from the banking sector; National Commercial Bank climbed 1.8 percent. Analysts at Al Rajhi Capital estimate the sector’s profits rose slightly in the third quarter because of higher net interest margins and broadly flat bad loan provisions.
Mediterranean and Gulf Cooperative Insurance (MedGulf) slumped 5.5 percent in active trade after saying it had received a warning from the central bank, which told the company to improve its capital adequacy ratio by December 31 or be suspended from issuing new insurance policies.
This year the regulator has cracked down on many insurance companies. The Dubai index added 0.8 percent in its most actively traded session since early August. Mid-to-large cap stocks were some of the top performers, with the Gulf’s only listed exchange, Dubai Financial Market, rising 2.7 percent.
In Abu Dhabi the index edged down 0.2 percent with the main drag coming from the banking stocks; First Abu Dhabi lost 0.5