Qatar sinks to 5-year low on banking sector uncertainty

DUBAI: 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.

Third-quarter results are expected to be announced later this month. Banks have been hurt as neighboring states have pulled out their deposits because of the diplomatic crisis.

Qatar’s central bank governor told local media on Wednesday that a withdrawal of deposits by neighboring countries had not hurt the banking sector and the government had enough money to protect banks. But he also said the government could only be a funding source of last resort.

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.

The Riyadh index rose 0.6 percent. Saudi firms are expected to release quarterly results later this month.

The Dubai index added 0.8 percent in its most actively traded session since early August. In Abu Dhabi the index edged down 0.2 percent.