GCC stocks tumble on withdrawal of ambassadors from Qatar over failure to stop interference in their internal affairs

Posted on 05 March 2014 with no comments from readers

Gulf stocks took a surprise tumble on Wednesday after an announcement by the governments of the UAE, Bahrain and Saudi Arabia that they were withdrawing their ambassadors from Qatar because Doha had failed to implement an agreement not to interfere in each others’ internal affairs.

The QE Index plunged two per cent, the DFM lost 0.9 per cent, Bahrain slipped 0.2 per cent and the Tadawul ended down 0.5 per cent. Traders said the news came out-of-the-blue and unsettled the bourses. Uncertainty is something universally disliked by investors who always ask the question, what next?

Extreme resentment

The Qatari ambassador was summoned to the UAE Foreign Ministry earlier this month over ‘extreme resentment’ about Qatar’s failure to respond to public insults about the UAE by a cleric.

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A joint statement from the UAE, Bahrain and Saudi Arabia issued late on Tuesday after a meeting of foreign ministers in Riyadh cited their ‘massive efforts to contact Qatar on all levels to agree on a unified policy… to ensure non-interference, directly or indirectly, in the internal affairs of any member state’.

This is not the first time there has been tension within the Gulf Cooperation Council over Qatar’s support for foreign dissidents. For example, Doha was a major backer of the Muslim Brotherhood in Egypt while other Gulf states have supported the military coup that removed them from power. Members of Qatar’s Al Jazeera TV station remain under arrest in Cairo.

However, such a public display is rare in a community where saving face and hiding disagreements is cultural preference. Stock markets that are presented with unpleasant surprises sell-off and that is what happened today.