Qatari shares fell after the UAE, Bahrain and Saudi Arabia said they were withdrawing their ambassadors to the country.
The move was triggered by the claim from the three countries that Doha had not implemented an agreement among Gulf Arab states not to interfere in each others’ internal affairs.
The news reversed early gains in markets across the region.
The QE Index had been up as much as 1 per cent during the day to a peak of 11,713 points, before ending more than 2 per cent lower to close at 11,346.58 as investors digested the significance of the announcement.
“The uncertainty towards the news that was published by those three countries on withdrawal of their ambassador is what’s causing markets to react aggressively,” said Tariq Qaqish, the head of asset management at Al Mal Capital, a Dubai-based investment bank.
Dubai's index had risen as much as 1.4 per cent to a peak of 4,181 points during the day before falling as much as 0.9 per cent into negative territory, standing at an intraday low of 4,093 points. The benchmark closed 0.4 per cent lower at 4,100.71 points, with 14 shares down and only two companies making gains.
GCC countries “have exerted 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”, the UAE, Bahrain and Saudi Arabia said after a late Tuesday meeting of foreign ministers in Riyadh.
Earlier this month the UAE Foreign Ministry said it had summoned Qatar’s envoy to the UAE, citing “extreme resentment” over Qatar’s inaction towards a cleric having publicly insulted the UAE.
“To say [today’s developments] were expected is a bit of a stretch, but it’s clear there have been rising tensions for a while,” said Nicholas Bortman, a partner at the Dubai-based office of the risk consultancy GPW.
“The rhetoric has been certainly picking up and this kind of a step is a tip of the iceberg from what’s going on below the surface.”
Abu Dhabi's index was up 0.3 per cent to 4,938.08 points, with 10 stocks rising and 18 falling.
Bahrain’s index fell 0.2 per cent to 1,364.71 points.
Saudi Arabia’s Tadawul seesawed: up as much as 0.6 per cent at 9,207.24 points before falling as much as 0.5 per cent to 9,099.41 points, then recovering to finish up 0.1 per cent at 9,161.33.
“It’s a surprise to everyone and we are trying to understand where this is coming from. These are usually sensitive issues,” a Dubai-based trader said.
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