Regional Political Tension Seen Hitting GCC Stock Markets

Regional markets are seen taking a hit on Sunday from rising political tension around Syria and following a heavy sell-off in Saudi Arabia in the previous session.

Gulf markets tend to take cues from the Kingdom, the region’s largest bourse, which dropped 4.3 per cent on Saturday.

King Abdullah cut short a holiday abroad because of regional tensions and Egyptian President Mohamed Mursi said he had cut all diplomatic ties with Damascus on Saturday and backed a no-fly zone over Syria.

“Given the sharpness of the fall in Saudi, chances are some selling pressure will spill over to other markets,” says Amer Khan, fund manager at Shuaa Asset Management.

“Generally, the region’s political risk is misunderstood by foreign investors but this is a real security risk because of the situation in Syria.”

In Qatar, government-backed telecom group Ooredoo has withdrawn its bid for Vivendi’s 53 per cent stake in Maroc Telecom, leaving rival Gulf operator Etisalat as the remaining bidder.

United Development Co will be in focus after the developer of a man-made island in Doha said on Thursday that it is raising a QAR1.56 billion ($428.4 million) loan facility from Qatar National Bank.

Elsewhere, oil rose and U.S. crude hit a nine-month intraday high on Friday after news that the United States had authorised sending U.S. weapons to Syrian rebels sparked concerns about Middle East supplies.

U.S. stocks fell on Friday.