September 12, 2017 / 9:15 AM / in 2 years

MIDEAST STOCKS-Qatar continues slide, Saudi Fransi down on stake buy

DUBAI, Sept 12 (Reuters) - Qatar’s stock market continued sliding in early trade on Tuesday as bank shares were sold, while Banque Saudi Fransi fell in Riyadh after France’s Credit Agricole agreed to sell a 16.2 percent stake in the bank to local investor Kingdom Holding.

Standard & Poor’s revised its outlooks for Qatar National Bank (QNB) and Qatar Islamic Bank late on Monday to negative. This was in line with S&P’s revision of Qatar’s sovereign outlook to negative in late August, but the news still pressured the banks on Tuesday.

QNB sank 1.2 percent and Qatar Islamic lost 1.1 percent, helping to drive the main Qatari stock index down 1.2 percent to a 19-month low.

Qatar’s economy has been hit by an embargo imposed in June by neighbouring Arab states and, although the wealthy government appears to have more than enough resources to ride out the sanctions, its banks face higher funding costs as the other countries pull out deposits and loans.

Regional Arab investors sold Qatari stocks as soon as the embargo was imposed. Their selling appears to have largely been completed, but in the last couple of weeks some other foreign investors, disappointed that there has been no progress towards a diplomatic solution, have been selling.

Saudi Arabia’s index was flat as Saudi Fransi dropped 1.8 percent to 32.40 riyals and Kingdom jumped 7.6 percent.

Credit Agricole is selling its stake for 5.76 billion riyals ($1.54 billion), which works out to about 29.5 riyals per share - suggesting Kingdom is buying at a substantial discount to the market. Credit Agricole may sell a further 5 percent of Saudi Fransi through off-market block trade deals, which could keep pressure on the stock.

The French bank had previously said it was looking to divest from Saudi Fransi, and analysts do not see the deal as pointing to more mergers and acquisitions in the sector; shares in other Saudi banks were narrowly mixed on Tuesday morning.

Dubai’s index edged up 0.1 percent and Abu Dhabi was 0.4 percent higher as the United Arab Emirates’ biggest bank, First Abu Dhabi Bank, rebounded 1.5 percent. The stock has been in a downtrend since early August. (Reporting by Andrew Torchia; Editing by Kevin Liffey)

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