Middle Eastern stock markets fell on Sunday, led by Saudi Arabia, as political tensions ramped up after US President Donald Trump announcing new sanctions on Iran. Trump on Saturday said additional sanctions would be imposed on Monday but that he wanted to make a deal to bolster Iran's flagging economy, an apparent move to defuse tensions following the shooting down of an unmanned US drone last week by Iran.
The Saudi index fell 1.5%, extending losses from the previous two sessions, as banking shares slid. Al-Rajhi Bank lost 1.3%, Samba Financial Group dropped 3.6%, and National Commercial Bank fell 1.9%. Qatar's index lost 1.3%, reversing gains from the previous session when it reached its highest since February, as the region's biggest lender Qatar National Bank fell 1.9%. Industries Qatar fell 1.4%.
QNB split its stocks this month, while Industries Qatar is due to follow suit on June 25. A 10-to-one stock split for companies on the exchange is being phased in from June 9, aiming to boost liquidity by encouraging smaller investors to buy shares. The Abu Dhabi index shed 1.1%, hurt by a 1.7% drop in First Abu Dhabi Bank (FAB), the United Arab Emirates' biggest lender. On Wednesday, FAB said that it would close its sole branch in Qatar, citing Doha's regulatory actions against the bank.
Earlier in June Qatar placed further restrictions on the bank as it continued an investigation into alleged currency manipulation, opened after the UAE and other Arab states began a boycott against Qatar in mid-2017. FAB said Qatari actions have no impact on its business outside Qatar and the Doha branch contributed less than 0.03% of its full-year 2018 net profit. In Dubai, the index lost 0.7% as developer Emaar Properties fell 1.6% and budget carrier Air Arabia lost 1.0%.
The UAE's aviation authority said on Saturday UAE-registered operators need to avoid areas that could jeopardise operations. Earlier, the US Federal Aviation Authority banned US operators from flying over some Iran-controlled airspace.
Egypt's blue-chip index lost 0.2%, its fourth consecutive session of losses since closing higher on Monday, the day Egypt's first democratically elected president Mohamed Morsi died while on trial in a Cairo court.
There have been calls for an inquiry into Morsi's death from many, including Amnesty International and the UN Human Rights office.
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