Arab States Banking Shares Plummet

Persian Gulf Arab stock markets were mixed on Thursday, with banks in the UAE and Kuwait generally weak despite a strong performance by their global counterparts.

The prospect of higher interest rates from central banks around the world, including Britain and Canada, bolstered banking stocks overnight and helped the S&P 500 score its biggest one-day percentage gain in about two months on Wednesday. Banks were also strong in Asia on Thursday, Reuters reported.

In Abu Dhabi, the only lender that rose was Abu Dhabi Commercial Bank, which added 0.1%. Union National Bank fell 1.7% and First Abu Dhabi Bank declined 1.4%, dragging the index 0.6% lower.

The Dubai index rose 0.4% as real estate-related shares were the most active. Builder Drake & Scull was the most heavily traded stock and it fell 1.1%, but its peer Arabtec jumped 4.4%, recovering from an 8.5% tumble on Wednesday.

Daily traded volume in Dubai rose by three-fifths from Wednesday’s low level. “When not much is going on in terms of headline news, some active fund managers start chasing the alpha factor, by buying stock at a low and aiming to sell them at a high,” a regional fund manager said.

Kuwait’s index fell 0.1% with National Bank of Kuwait dropping 3.3% and Boubyan Bank shedding 1.2%.

The stock market in Riyadh is closed for an Eid al-Fitr break and will resume trade on July 2. Egypt was also closed for a public holiday.

  Qatar Crisis Continues

Numerous global banks and currency exchanges are refusing to deal in Qatari riyals amid the ongoing diplomatic spat in the Persian Gulf, financial institutions told Arab News.

Qatar’s currency has been under pressure following the June 5 move by Saudi Arabia, the UAE, Egypt and Bahrain to cut diplomatic and transport ties with Doha, accusing it of backing terrorism.

Many exchange houses in the Persian Gulf reportedly stopped accepting riyals early on in the crisis, and global institutions have followed.

The Post Office, one of the UK’s main operators of currency-exchange services, said it took the decision to “temporarily” stop trading in riyals on June 5.

This is because the banks it deals with had refused to deal with the currency. “Banks we utilize to dispose of excess Persian Gulf currencies informed us at the outset that they were no longer buying (Qatari riyals),” a Post Office spokeswoman said.

Travelex, another currency exchange in the UK, also said it is not trading in riyals, although will still honor its “buy back guarantee” for this currency.