Qatar’s bourse fell sharply on Wednesday after the United States and Switzerland launched criminal probes against FIFA officials, while other Gulf stock markets were weak as oil prices failed to recover from Tuesday’s drop.
Swiss authorities opened criminal proceedings against individuals on suspicion of mismanagement and money laundering related to the award of rights to host the 2018 and 2022 soccer World Cups, which went to Russia and Qatar respectively.
Meanwhile six high-ranking soccer officials, including two vice-presidents of world governing body FIFA, were arrested by Swiss police and detained pending extradition to the United States.
The Doha index dropped as much as 2.8 percent to a one-month low of 12,067 points in a broad sell-off during the day, but ultimately pared some of those losses and closed at 12,229 points, a 1.5 percent decline.
Heavyweight Qatar National Bank fell 2.5 percent and Ezdan Holding, which had surged earlier this month because of its upcoming inclusion in MSCI’s emerging markets index, lost 3.3 percent.
It is not clear whether the legal actions may result in Qatar losing the right to host the 2022 World Cup; both Doha and FIFA have strongly denied any wrongdoing in Qatar’s successful bid for the Cup.
Even if Qatar did lose the World Cup, the world’s top natural gas exporter is so rich that it could easily absorb the waste of money spent on stadium construction and other preparations, and the loss of tourism revenues. It could continue to spend what it needs to keep its economy growing rapidly.
However, losing the Cup would probably hurt sentiment among retail investors, triggering a temporary downturn in the market.
Saudi Arabia’s index fell 0.5 percent with most blue chips in the red. Petrochemicals giant Saudi Basic Industries fell 0.4 percent as Brent crude gave up early gains and fell below $64 per barrel in response to a strong U.S. dollar.
Leading retail lender Al Rajhi Bank slipped 0.2 percent to 67.25 riyals after Al Jazira Capital cut its target price for the stock to 61.50 riyals from 63.90 riyals, citing two straight year-on-year declines in quarterly profit and a slowdown in lending activity.
Miner Ma’aden dropped 3.0 percent after hitting an all-time closing high of 47.90 riyals on Tuesday.
But Dallah Healthcare surged 8.5 percent after Al Madina newspaper quoted Health Minister Khalid al-Falih as saying the study phase for the introduction of health insurance for all Saudi citizens was complete and it would be implemented in coming years.
Elsewhere in the Gulf, Dubai’s index fell 1.7 percent to 3,992 points as most stocks declined. Trading volume spiked when the benchmark fell below technical support in the 4,000 point area, where the index had peaked in December and February. Abu Dhabi’s bourse lost 0.9 percent in another broad decline.
Egypt’s market inched down 0.1 percent but Telecom Egypt surged 4.5 percent after saying it might buy back its own shares following their drop due to the company’s exclusion from MSCI’s emerging markets index this month.
Also, Egypt’s prime minister on Wednesday appointed new government representatives to the company’s board, which was due to elect a new chairman and chief executive officer later in the day.
Property firm Medinet Nasr for Housing and Development (MNHD) jumped 2.1 percent, extending gains on a planned deal with Saudi Arabian retailer Fawaz Abdulaziz Alhokair to build a mall at MNHD’s Teegan development.
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