Gulf markets struck by Turkey turmoil

dubai — Gulf stocks fell on Sunday, pressured by general weakness across emerging markets as investors steered clear of assets perceived as risky due to a diplomatic and economic spat between the United States and Turkey.

The Turkish lira plunged last week after US President Donald Trump doubled tariffs on Turkish steel and aluminium imports. On Friday, the lira fell 18 per cent to a record low.

Other geopolitical factors, such as the reintroduction of US sanctions on Tehran, as well as the diplomatic dispute between Saudi Arabia and Canada, added further pressure to the markets.

The Turkish crisis weighed the most on the Qatar market. The index down 2.6 per cent, was pulled down by Commercial Bank and blue-chip Qatar National Bank, which dropped 4.1 per cent and 4.7 per cent, respectively.

QNB owns Finansbank in Turkey and Commercial Bank has a majority stake in Turkish lender Alternatifbank.

In Saudi Arabia, the index fell 1.4 per cent, below its 100-day average for the first time this year. It closed at 8,065 points, the lowest since late May.

Despite Sunday’s sell off, “Mena equities remain underrepresented in global portfolios [and are thus less exposed to global emerging market outflows],” said Sanat Sachar, equity research analyst at Al Mal Capital.

“GCC equities are pegged to the US dollar, and are thus insulated from the EM local currencies turmoil. This means that

some asset allocators could even consider the GCCs as an EM safe haven.”

In Dubai, where the index shed one per cent, Air Arabia was down 2.9 per cent. The company last week reported a 24 per cent drop in second quarter profit.

All eyes in Dubai were on the emirate’s largest bank, Emirates NBD, which earlier this year agreed to buy Turkey’s Denizbank from Russia’s state-owned Sberbank for $3.2 billion.

There was an overhang on the bank’s stock because of the Turkish deal, one analyst said. Shares were down 1.7 per cent.