Mideast Stocks Little Changed After Qatar, OPEC+ Breakthroughs

Most equities benchmarks in the Gulf paused for breath on Wednesday, after Saudi Arabia enabled an OPEC+ deal by cutting crude oil production and a bloc of Arab states formalized a reconciliation with Qatar that had already been priced in.

Dubai’s main gauge was little changed at the close, with its banking sector down the most, while Abu Dhabi’s index dropped 0.3%, weighed down by its heaviest member First Abu Dhabi Bank PJSC. Qatar’s QE Index slipped 0.4%, paring some of the previous session’s gains.

On Tuesday, four Arab states including the United Arab Emirates and Saudi Arabia agreed to fully restore diplomatic ties with Qatar, ending more than three years of dispute that divided the major energy-producing region at a time of heightened tensions over Iran.

The reconciliation was priced into the region’s stocks before Arab governments formally adopted it on Tuesday night. Most equities across the region advanced Tuesday morning with Qatari stocks rising 1.6%, the most since early December, after Saudi Arabia said it will re-open its airspace and land border to Qatar on Monday.

“The excitement is likely to fade for the near term, primarily because the news has been floating around for a month,” said Joice Mathew, head of equity research at United Securities in Muscat, Oman. “There was a lot of pre-positioning in the stocks earlier. That is likely to make it a ‘sell the news’ event.”

Saudi Arabia’s Tadawul All Share Index was also barely changed, with about half of its members rising. Egyptian stocks closed up 1.1%, the only gainers in the region.

“The direct economic significance for Saudi Arabia is relatively trivial, apart from potentially higher cross-border investment flows,” according to Hasnain Malik, the Dubai-based head of equity strategy at Tellimer. “The geopolitical importance is greater, in terms of prizing Qatar a little away from the Iranian and Turkish sphere of influence.”

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