$9.2 Billion Wiped Out In Qatar Stock Rout: Surveying The Carnage

It was a rough day for financial assets in Qatar following a decision by Saudi Arabia, Bahrain, the United Arab Emirates and Egypt to cut diplomatic ties.

The move was billed as punishment for Doha’s support of “destabilizing” forces, but really, what we saw on Monday was the culmination of simmering tensions that came to a head late last month after inflammatory comments attributed (maybe falsely) to Qatari emir Sheikh Tamim bin Hamad Al Thani showed up on Qatar state news.

Those comments included conciliatory remarks about Iran and Hezbollah.

This isn’t the first time something like this has happened. A similar incident unfolded in 2014 when Doha was ostracized for supporting the Muslim Brotherhood. Citi thinks this time may be worse.

The fallout was swift and as noted earlier this morning, stocks plunged, yields spiked, and 12-month riyal forward points rose 173 to 375, the highest since February 2016:

Fwds

Below, find a survey of the damage from Bloomberg. Do note that the Qatar QE Index’s RSI dropped to 18.3 today, well below the 30 level that’s a technical signal for a benchmark falling too far, too quickly:

Oversold

That’s the deepest oversold level since November 15.

  • Lowest 14-day RSI among nine major stock benchmarks in the Middle East
  • Benchmark dropped to the lowest level since January 2016, fell the most since 2009
  • None of the 19 members composing the index rose
  • About 3.9m shares traded, some 50% more than 3- month daily average
  • Total 33.5b riyals ($9.2b) in market value wiped off Qatari market by Monday’s decline
  • Qatar Gas Transport, Aamal, Qatari Investors Group, Gulf International Services drop 10%, maximum allowed by exchange in single session
  • Lenders Qatar National Bank and Masraf Al Rayan, which together represent about 30% of the index weighting, fall 6% and 9.9%, respectively
  • “There was not a great deal of political risk being priced into the regional markets, therefore the markets have been caught off-guard by this unexpected development,” says Jameel Ahmad, vice-president for market research at foreign exchange brokerage FXTM
    • “This is something that international investors will be monitoring in a week that was expected to be dominated by the upcoming U.K. election”

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